Impact investing goes beyond managing environmental, social and governance (ESG) risks and involves the allocation of capital to generate a financial return but also to create a positive impact on the environment, society and the economy. This includes community investment directing capital to traditionally under-served individuals or communities, as well as financing for businesses with clear social or environmental purposes. According to the Global Impact Investing Network (GIIN), the global impact investing market grew to $502 billion in 2018.
Investors’ approaches include listed and non-listed investments, from microfinance to global equity funds. Impacts range across environmental, social and economic criteria, depending on the investor, addressing challenges such as economic inequality, climate change and education. There are various methods of measuring impacts, and an increasing number of impact investors are seeking to align their portfolios with the Sustainable Development Goals.