What is the difference between impact investing and sustainable investing?

What is the difference between impact investing and sustainable investing?

Impact investing focuses on generating measurable social or environmental benefits alongside financial returns, while sustainable investing considers environmental, social, and governance (ESG) factors in investment decisions.

Can you give me examples of each?

Sure! An example of impact investing is funding a renewable energy project that aims to reduce carbon emissions. Sustainable investing might involve investing in a company that has strong ESG practices, like a firm committed to reducing waste and promoting diversity.

Which one is better for long-term returns?

It depends on your investment goals. Impact investing may offer high returns if the projects succeed, while sustainable investing can provide stability through companies with strong ESG practices.

Are there any risks associated with either approach?

Yes, impact investing can be riskier due to the focus on new ventures, while sustainable investing may face risks related to changing regulations and market perceptions of ESG factors.