Giving With Impact Investing with Impact: Doing Well by Doing Good
Jul 20, 2022
Juliette Menga, an investment director at AETOS and chair of its ESG committee, and Nitin Barve, managing director at the Schwab Center for Financial Research, delve into the evolution of impact investing. They discuss the distinction between ESG, SRI, and impact approaches, while emphasizing the importance of integrating ESG criteria into investment strategies. The duo addresses common misconceptions about the financial performance of ESG investments and highlights the role of consumer awareness and regulatory scrutiny in shaping a more sustainable investment landscape.
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Impact Investing Overview
- Impact investing seeks financial returns while creating positive social or environmental impact.
- It attracts growing interest and funds, but exaggerated claims raise concerns.
Impact vs. ESG
- Impact is the primary goal in impact investing, not just a secondary benefit.
- This distinguishes it from ESG or sustainable investing where impact is a tool for better returns.
SRI, ESG, and Impact Investing
- Socially Responsible Investing (SRI) and ESG investing are broader than impact investing.
- SRI uses exclusionary screening, while ESG integrates factors across industries, seeking best-in-class companies.