ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ESG Channel
  2. Telling the Difference Between ESG and Impact Investing
ESG Channel
Share

Telling the Difference Between ESG and Impact Investing

Karrie GordonDec 20, 2021
2021-12-20

A common mistake investors and advisors can make is the belief that environmental, social, and governance (ESG) investing and impact investing are interchangeable ideas and terminology when, in actuality, they are related but ultimately different things. Andrew Lee of UBS and Kim Griffin of Toniic recently sat down with Worth to discuss the differences.

ESG is, broadly speaking, a criteria for investing that encompasses a broad range of ideas, approaches, and priorities. It includes a range of data sets and can have various goals when investing within ESG. ESG investing is typically focused mostly on the financial aspect; many advisors and investors see the potential for growing returns within ESG and therefore seek to invest for financial gain.

Impact investing isn’t a criteria but a style of investing or strategy. It focuses not on the financial benefit of investing in ESG priorities but instead invests to enact change, either environmental or social.

“I think what a lot of people don’t understand about ESG is it usually is really focused on looking at those environmental, social, and governance factors that are going to have a material financial effect on the company,” said Kim Griffin, member engagement director at Toniic. “So it’s really still rooted in looking at the financial impacts of the company, which may or may not meet expectations of investors who want to solve the climate crisis and have more flexibility on financial risk and financial return expectations.”

The Wide World of Funds

With the growth of ESG in the last couple of years, there is now a wide range of funds available for investors with various priorities and goals in investing sustainably. For investors focused on impact investing above all and seeking change, they can do that in ways that can provide returns these days.

“There are opportunities, certainly in the areas of climate, health, education, and elsewhere, where the opportunity sets are so large that there are commercial solutions that can really deliver at above-market-rate returns while having that tangible positive impact. But it’s not everything,” said Andrew Lee, managing director, and head of sustainable and impact investing at UBS. “There are some areas where you might have to take [a] longer time risk or perhaps the risk that the financial return won’t quite be there to really solve problems in certain geographies.”

Understanding the distinction between ESG and impact investing is an essential clarification for advisors to make with their clients to best guide them to the types of ESG funds that suit their long-term goals. State Street Global Advisors offers a variety of ESG funds with different investment strategies and plans, from the broadly investing SPDR S&P 500 ESG ETF (EFIV B+) to a governance-focused fund with the SPDR SSGA Gender Diversity Index ETF (SHE B-), or a fund that focuses on the clean energy technologies with the SPDR S&P Kensho Clean Power ETF (CNRG A-).

For more news, information, and strategy, visit the ESG Channel.


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X