Broker Check
Impact Investing

Impact Investing

January 29, 2024

Today’s investors are demanding more transparency from the companies they invest in and more from their investments than maximizing profitability. Many are seeking to invest their money in ways that are aligned with their values and in companies that foster a positive impact in their community and the world at large. There are three main values-based investing strategies: ESG, SRI and Thematic Investing. While the strategies are similar, it’s important to understand the subtle differences between them.

ESG is a form of sustainable investing used to identify investments with both strong returns and positive social impacts from companies that score highly on Environmental, Social and Governance criteria. An ESG score is based on a company or fund’s performance using those criteria. Generally, the higher a company’s ESG score, the more likely its business practices will lead to higher, socially conscious returns.

SRI or Socially Responsible Investing uses a screening process that allows investors to evaluate a company based on specific ethical standards and socially responsible behaviors. An SRI investor looks for companies or funds that align with their moral and ethical beliefs and may choose to invest in or avoid investing in companies based on their social behavior.

A recent Forbes article provided the following example to explain the difference between ESG and SRI investing as follows:

“… here’s how that difference might play out when considering LGBTQ-friendly investments: Using ESG criteria, an investor might be satisfied by finding a company that scores well on evaluations of its environmental, social and governance policies.

Meanwhile, an SRI investor might exclude that company as a potential investment if it had exploitative advertising practices toward the LGBTQ+ community as a whole, even if it performed relatively well for other ESG criteria, like positive environmental impact.”

With Thematic Investing, there is a direct connection between value-based objectives and how investors’ capital is used. This strategy, more prominent in private market investments, is used by investors looking for financial gain and measurable social or environmental impact.  For example, a thematic investor may look to invest in a company making a measurable, positive impact on the climate change challenges we face.

Do these strategies make a difference? They are certainly changing the financial landscape as studies show that interest in responsible investing is growing among all demographics and more and more companies recognize their responsibility to help secure a sustainable future. According to Bloomberg Intelligence, ESG assets were valued at $35 trillion at the beginning of 2021 and that figure is expected to grow to $50 trillion by 2025.

Knowing what values you want to focus on is the first step to choosing a responsible investing strategy. While all three strategies overlap a bit, the one you choose will depend on what you want to achieve with your investments. If you are new to impact investing, you may want to approach it gradually, making changes to equity allocations and then revisiting your portfolio in a year or so to reflect on the performance.

If impact investing is something you are interested in exploring, our Certified Financial Planner™ professionals are available to help you get started. To schedule an appointment, please call 609-216-7440 or email us at To learn more about how the team at Knox Grove Financial can help with “Your Path Forward”, visit our website at