The difference between ESG and impact investing and why it matters

Engineers doing routine maintenance work at a wind turbine in Jhimpir. © Photo by Khaula Jamil/IFC

Check out this article by Neil Gregory at IFC - International Finance Corporation and Kusi Hornberger at Dalberg.

How is Environmental, Social & Governance (ESG) investing different from impact investing?

There are 3 key requirements of investors to ensure their investments are impact investments and not ESG:
1) Selection of assets with intent for impact
2) A contribution to the impact of the investee firm
3) Objective measurement of that impact

These practices, enshrined in the Operating Principles for Impact Management, are what ensure that investments make a real, positive impact, and help the market avoid ‘impact washing.’