What is the difference between impact investing and socially responsible investing?

What is the difference between impact investing and socially responsible investing?

Impact investing focuses on generating measurable social or environmental benefits alongside financial returns, while socially responsible investing (SRI) involves selecting investments based on ethical guidelines and avoiding harmful industries.

Can you give me examples of each?

Sure! An example of impact investing could be funding a renewable energy project that aims to reduce carbon emissions. An example of SRI might be avoiding investments in tobacco or fossil fuel companies.

Which one is better for long-term returns?

It depends on your investment goals. Impact investing can offer competitive returns while contributing to social good, but SRI may provide stability by avoiding high-risk sectors.

Are there any risks associated with impact investing?

Yes, impact investing can carry risks such as market volatility, the potential for lower liquidity, and the challenge of measuring social impact accurately.