The concept of impact investing has revolutionized the worldof sustainable finance, allowing people to make ethical investments with a
positive effect on society and our planet. But it may surprise you to know that
not all socially responsible investing is considered impact investing—there's
another type called "sustainable investing." In this blog post, William
Schantz breaks down the differences between sustainability and impact
investment, shedding light on the unique benefits of each approach. From understanding
how they seek to create financial returns for investors through different asset
classes like green bonds or ESG-related stocks to exploring which option offers
an improved return profile over traditional strategies, read on to discover
what sets these two apart from one another.
On Impact Investing Vs. Sustainable Investing
Impact investing is an investment approach aimed atgenerating both social and financial returns, says William Schantz. It is a type
of intentional investing that focuses on achieving measurable positive impact
beyond a financial return, such as improved health outcomes or increased access
to education and employment opportunities for underserved populations. Impact
investments target funds, organizations, and businesses to generate measurable
environmental and social impact alongside a financial return.
Sustainable investing, also known as socially responsibleinvesting (SRI), is an https://en.wikipedia.org/wiki/Investment_strategy that applies environmental, social,
and corporate governance (ESG) criteria to select investments based on their
commitment to sustainability. This form of investing takes into account the
overall ESG rating of each company before making any decisions. Sustainable
investors seek to invest in companies that are making a positive impact on
society and the environment. Sustainable investments may include stocks, bonds,
mutual funds, ETFs (exchange-traded funds), and other financial products
marketed as ESG-friendly. Many sustainable investing strategies also focus on
avoiding investments in industries that have negative impacts, such as tobacco
or fossil fuels.
According to William Schantz, the primary difference betweenImpact investing and Sustainable Investing is their objectives: while Impact
investors seek to generate a measurable social or environmental outcome
alongside a financial return, Sustainable investors use ESG criteria to make
responsible investment decisions based solely on achieving maximum financial
returns. While both approaches aim to improve the world in different ways, they
share a common goal of creating long-term value for all stakeholders involved.
Ultimately, these approaches can be used together to create a more equitable,
just, and sustainable world.
’s Concluding Thoughts
In conclusion, Impact Investing and Sustainable Investingare both strategies that aim to address global challenges such as poverty
alleviation, climate change, health care delivery, and access to education.
Impact investors, as per William Schantz, strive to generate measurable positive
social or environmental outcomes alongside financial returns, while sustainable
investors focus on making responsible investment decisions based on ESG
criteria for the purpose of maximizing their financial return. Ultimately,
these two approaches can be employed in tandem in order to create a more
equitable and sustainable world.
