ESG, SRI, and Impact Investing: What’s the Difference? – Investopedia

Written by Michelle Zhou on June 20, 2021
Fact checked by Amanda Jackson

The value of an investment is no longer just about returns. An increasing number of investors are also calling for their money to make a positive impact on society and the world at large.

In fact, socially responsible investing and one of its subsets, impact investing, accounted for more than $1 out of every $3 under professional management in the U.S., according to the 2020 survey by the U.S. Forum for Sustainable and Responsible Investment. This amounts to over $17 trillion in assets under management yearly, an increase of 42% from 2018.

Accompanying the growing demand is a proliferation of funds and strategies that integrate ethical considerations into the investment process. Environmental, social, and governance (ESG), socially responsible investing (SRI), and impact investing are industry terms often used interchangeably by clients and professionals alike, with the assumption that they all match in meaning and approach. However, distinct differences exist that will affect how client portfolios should be structured and which investments are suitable for meeting social impact goals.

Read the full article: Investopedia