There is a way to help shape a better world when funds are invested sustainably, from alleviating poverty and hunger to combating climate change and injustice. The extent of the impact also depends on the ambition and nature of the investment, whether the choice is exclusions or Impact incorporating ESG (Environmental, Social and Governance) integration. Demand for Impact Investments has been created by changing investor attitudes and a need for change that has been fuelled by various factors including: investment solutions needed to combat climate change and to help finance the UN Global Sustainable Development goals; deal with mass urbanisation and population growth.

Impact investments have historically tended to be in private markets, such as private equity and debt, venture capital and infrastructure. Impact which incorporates ESG integration as a strategy is seeking to outperform using these factors, whereas exclusion strategies are simply seeking to align investors’ portfolios with their values.

Impact Investing also allows investors to reflect their values in their portfolio such as investing in companies that focus on environmental (for example, reducing pollution), social (such as human rights) and governance (for example, stopping corruption) issues and opportunities. The next generation of Impact Investments will provide investors with investments that provide measurable social and environmental development whilst delivering market rate returns. As activists, artists, philanthropists and others look for new ways to drive change, Impact Investing is being seen as a way to extend such missions, and expand capacity to make positive changes in the world.