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How Impact Investing Can Drive Social and Environmental Change
June 2, 2017 in Ethical Finance
What’s the difference between ethical and impact investing? When investors first become aware of impact investing, they wonder if it is the same as ethical or socially responsible investing (SRI).
So what is the difference?
Ethical investing typically focuses on excluding controversial sectors, for example tobacco and firearms. By contrast, SRI selects companies for positive environmental, social and governance (ESG) performance, relative to industry peers, irrespective of the impact of the product or services.
Impact investing, on the other hand, offers what I believe to be a more dynamic approach to investing, in this rapidly growing area by going a step further. This type of investing aims to solve social and environmental challenges, by selecting companies which through their products, services and business practices, create a positive impact. It is this positive element and of course the financial return that attracts investors.
The SDG’s adopted by its 193 member states in September 2015, contain specific targets to address issues like poverty, clean water, energy, gender inequality, health and education by 2030, as shown below. The opportunities for companies that can help address them are huge.
about the author
Alison Jane Reid
Alison Jane Reid - Journalist, Editor & Emerald Princess of Slow, Sustainable Luxury Living - 18 year track record interviewing real icons for: The Times, The Lady, You, The Mirror and Country Life. Now leading her alluring fairtrade, emerald revolution - Don’t Miss Out - Have you joined The Ethical Hedonist set?