Additional information and frequent dilemmas

 

​​​​​​​​The difference between Sustainable Finance and Impact-Aligned investments

 

The investment approaches used by Impact-Aligned investments seem quite similar to those used by ESG investments/Sustainable Finance: possible positive screenings include best-in-class or thematic investing. The main difference is that Impact-Aligned investments are transparent about company impacts since they provide evidence through their impact performance measurement. This can be done, for instance, by highlighting the GHG emissions per invested Euro and comparing this to a benchmark. ESG investments, in contrast, primarily focus on ESG risks and/or opportunities and, accordingly, measure the ESG performance of investees or assets. This can be done, for instance, by aggregated ESG scores.

 

Can impact investing be achieved with listed strategies?

There is a distinction between public and private markets, since processes, investees and levers to drive impact are very different.

 

Private impact investing typically involves a longer investment horizon, deeper engagement with investees, and a wider array of financial instruments. It also provides access to investment opportunities that are not always available to, or easily accessed by, broader stakeholders such as retail investors.

 

In contrast, investing in public markets limits the levers at the disposal of capital providers to influence impact-driven decisions. While it shares the overarching goal of generating positive social and environmental impact, it tends to operate with shorter term investment horizons and is shaped by different expectations regarding liquidity and risk-return profiles.

 

Despite the absence of widely accepted criteria to clearly distinguish sustainable investing from impact investing in public markets, this segment can be seen as impact investments when in line with the guide on listed equities published by the Global Impact Investing Network (GIIN).​​

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What about SFDR (Sustainable Finance Disclosure Regulation)?

​Coming soon (WiP)...