Differences Between Impact Investing and ESG Investing

This document is a guide that outlines the distinctions between impact investing and ESG investing. It explains that while both terms are often used interchangeably, they represent different concepts. Impact investing is defined as investing with the intention to generate positive, measurable social and environmental impact alongside financial returns. In contrast, ESG investing integrates environmental, social, and governance factors into investment analysis primarily for risk management and long-term financial performance. The document details how impact investing focuses on intentionality and measurable outcomes, whereas ESG investing serves as a framework for assessing sustainability risks. It also discusses the historical context of both terms, noting their rise in popularity in the 2000s, and highlights the differences in investor motivations and strategies. Furthermore, the guide emphasizes the importance of understanding these differences as the demand for impact investing continues to grow.