These other terms are useful, but we have three goals that only ‘impact investing’ addresses:
- To focus on an investment strategy (not a framework)
- To educate our audience in a way that is actionable–Choose your impact
- To be inclusive of companies working to make positive changes, regardless of industry.
For context:
Sustainable investing and socially responsible investing (SRI) are often used interchangeably with impact investing, with adjustments made for specific company, policy or industry focus.
Values-based Investing is an umbrella term that encompasses impact investing, sustainability investing, socially responsible investing (SRI); and, environmental, social and governance (ESG). This term does a great job, but somewhat lacks real marketing punch.
ESG was initiated as a framework, not an investment strategy. ESG (environmental, social and governance) helps us understand how a company manages risks and opportunities around sustainability issues. It looks into the past and provides an evaluation. ‘ESG investing’ often focuses on eliminating industries from portfolios.