What is Sustainable Development Investing? What is the difference between ESG investing and impact investing?

What is Sustainable Development Investing

This article introduces Sustainable Development Investing and its differences from ESG investing and impact investing.

Sustainable development investing refers to investing measured by the United Nations Sustainable Development Goals (UN SDGs), which can have positive impacts without negative ones.

Related Post: What is Impact Investing and How is it Different from ESG Investing

Sustainable Development Investing, ESG Investing, and Impact Investing

Sustainable development investing includes some ESG investing and impact investing:

  • ESG investing: Excluding negative screening (considering that it will not have a negative impact, rather than directly having a positive impact), ESG integration, ESG positive screening, and sustainable theme investing all belong to sustainable development investing.
  • Impact investing: Whether aiming to achieve returns at the general market level or returns below the general market level, impact investing will have a positive impact on the environment and society and is also considered sustainable development investing.

The definition of sustainable development investing is broader, and all impact investing and most ESG investing can be considered sustainable development investing. The main characteristics of sustainable development investing are sustainable development goals and positive impacts. Traditional investing does not belong to ESG investing, impact investing, or sustainable development investing.

Sustainable Development Investing Definition
Sustainable Development Investing Definition

Investors can determine whether investing to sustainable development investing through the following methods:

  • For the investees, use sustainable classification to determine whether the company’s business and activities are consistent with sustainable development goals.
  • For investing projects, use sustainable standards for evaluation, such as the Green Bond Principles and Social Bond Principles published by the International Capital Markets Association.
  • Investing that does not meet the above conditions is excluded from situations that have a negative impact on sustainable development goals. If investing can promote industry transition, it can be considered a sustainable development investing.

Reference:

Definition of Sustainable Development Investing

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