Sustainable, responsible, and impact investing: what's the difference?

When it comes to investing for the future, more and more people are looking for ways to do good with their money. But what does that mean, exactly? The terms “sustainable,” “responsible,” and “impact” investing are often used interchangeably, but there are actually some important distinctions between them. Sustainable investing is an umbrella term that refers to any investment strategy that takes environmental, social, and governance (ESG) factors into account. That could mean investing in companies that are working to reduce their carbon footprints, or those that have strong policies in place to promote diversity and inclusion. Responsible investing is similar, but with a focus on shareholder engagement. This means using your voice as an investor to pressure companies to make changes that you believe are important, such as adopting sustainable business practices or increasing transparency around their supply chains. Impact investing is all about making a positive difference in the world with your investments. This could mean investing in affordable housing developments or renewable energy projects, for example. The key is to choose investments that you believe will have a positive impact on society or the environment, while also providing a financial return. So, which one is right for you? It depends on your goals as an investor. If you’re looking to make a difference in the world, then impact investing is a good option. If you want to ensure that your money is supporting companies that are behaving responsibly, then sustainable or responsible investing may be a better fit. And if you’re simply looking for the best financial return on your investment, then all three of these approaches can be valuable tools to consider.