David Morey 
Explore conscious investing choices. Take a closer look at impact investing vs. ESG and understand their role in socially responsible portfolios.
Investing is the most effective way to grow the money you’ve worked hard to earn. You’re leaving money on the table by avoiding exploring the best investment options. Over 60 percent of adults have invested in the stock market, but it’s one of several options worth considering.
Two options to weigh for sustainable investing are impact investing vs. ESG. These paths for investment offer impressive financial returns. They improve the environmental outcome of your investment. You can earn money while attempting to make the world a better place.
Luckily, you’re in the perfect place to learn more about how to become an impact investor. Continue reading to learn the difference between impact investing vs. ESG today!
What Is ESG Investing?
ESG investing uses several criteria to determine factors that could affect or hamper business performance. The primary areas ESG investing focuses on are Environmental, Social, and Governance factors.
You can use these factors to weigh the risks associated with your investment. You can maximize your financial returns while diminishing the risk of losing your hard-earned money. It’s also an excellent way to align your portfolio with socially responsible ideas and practices.
Many investors and firms implementing ESG investing principles notice better investment performance. Consider investing in companies focused on renewable energy sources. Using this ESG investing strategy is a fantastic alternative to investing in brands focused on fossil fuels.
What Is Impact Investing?
ESG investing focuses on frameworks to assess risks. Impact investing stands out because it focuses on the environmental and social benefits of what you’re putting money into. The financial returns you gain from your investment are a side benefit rather than the primary reason behind investing your hard-earned cash.
Many impact investors focus more on making a difference for social causes and the environment than making a massive profit. If you’re concerned about the path society and the planet is on, consider becoming an impact investor.
The purpose of impact investing is to achieve a specific social goal. It’s a forward-looking investment strategy.
Avoid focusing on a company’s past activities. Invest based on your goals to see the desired results with impact investing. Ensure you’re prioritizing transparency with this process.
You’re making intentional investments to create positive change in the world around you. There’s also an expectation of a financial return from these investments. You can monitor and track the change caused by your investment decisions with impact investing.
Consider Impact Investing vs. ESG Today
Knowing the best ways to invest your money benefits your wealth and community. Choosing impact investing vs. ESG is challenging because each provides significant benefits.
ESG compliance solution focuses on environmental, social, and government-related factors. You’ll invest based on the risk and reward of the investment. Impact investors aim to implement change to make a better world with little interest in financial gain.
Learning to make your money work for you is one of the best financial hacks. Read our Making Money articles and guides to build wealth and enjoy an early retirement today!
