There are multiple ways to ESG investing, from integration, screening, impact investing, and more in between.
But it can be hard to distinguish between different ESG approaches.
Negative screening, for example, involves avoiding investing in companies whose products and services are considered morally objectionable by the investor or certain religions, international declarations, conventions or voluntary agreements, according to the CFA Institute.
Impact investing arguably goes a step further, where investments are made with the specific intent of generating positive, measurable social and environmental impact alongside a financial return.
Fund selectors are becoming more engaged in impact investing, according to figures from Natixis Investment Managers. Last year, four in 10 (42 per cent) surveyed said they were engaged in impact investing, up from a third (32 per cent) in the year prior, and 10 per cent in 2019.
“Looking ahead, we expect sustainable and impact investing to become a cornerstone of many UK investors’ portfolios,” says Doug Abbott, head of UK intermediary at Schroders.
So, is this coming to pass - are clients showing more interest in impact investing?