Impact investing is not a tool, like ESG, but a more defined investment strategy. Impact investing intends to create a material, additional and measurable positive impact on society. The scope of analysis is larger – while ESG information focuses on a company’s operations (often relative to its peers), impact investing takes a more holistic and absolute approach by evaluating a company’s purpose, as reflected in its core products and services.
Impact investment managers look for companies contributing meaningful solutions to unmet social and environmental needs. In search for a consensus around these needs, impact investors often refer to the 17 UN Sustainable Development Goals as a framework. These Global Goals, adopted by 193 countries, describe specific measures of progress that we must make to tackle our most pressing global problems. The Global Goals guide impact investors’ investment selection and reporting: for example impact themes might include investments in education (Goal 4), renewable energy (Goal 7) or access to healthcare (Goal 3).