Impact Investing vs ESG
What’s the difference between ESG investing and impact Investing and why do both of these approaches matter?
Environmental, Social, and Governance (ESG) and impact investing are often lumped together, but there are meaningful differences between these approaches. With so much positive and negative spin and contradictory coverage of ESG and impact investing, many investors are understandably confused about what these terms mean and how they differ in practice.
I have worked in the sustainable finance industry both in the United States and in emerging markets – for over 24 years and now lead one of the longest-serving ESG- and impact-focused investment advisory firms in the US. To help investors better understand the differences between ESG and impact investing, I will briefly compare them in terms of purpose, measurement practices, investment approach, and market size.