But as the world of sustainable finance becomes more mainstream, we often hear questions about impact investing and ESG investing. What’s the difference, and which one really aligns with your values? 

Here’s a simple guide to help you understand how these two approaches differ – and why impact investing may be the right choice for you. 

We hope you find this information helpful.

Please remember, it's for guidance purposes only and not financial advice. When investing, your capital is at risk and you may not get back the full amount you invested. 

What is ESG investing?

ESG (Environmental, Social, and Governance) investing looks at how companies manage sustainability-related risks and opportunities. ESG criteria assess a company’s performance on: 

• Environmental impact – e.g., carbon emissions, energy use, waste management 

• Social responsibility – e.g., labour practices, community engagement 

• Governance – e.g., executive pay, diversity on the board, business ethics 

ESG is a tool for identifying risks and avoiding harm. It’s often used to screen out companies that are poorly governed or operate in environmentally damaging sectors. 

However, ESG alone doesn’t guarantee your money is actively making a positive difference. It can help minimise harm, but doesn’t always drive intentional change.

What is Impact Investing? 

Impact investing goes beyond avoiding harm – it actively seeks to do good.

Like ESG, it considers environmental and social issues, but with a key difference: 

The primary aim of impact investing is to generate measurable, intentional positive impact – alongside financial returns. 

At Triodos, impact means investing only in companies and organisations that intentionally create positive change – whether that’s fighting climate change, improving healthcare, or advancing social equity. 

Every company in our Triodos Impact Investment Funds is selected for its contribution to a fairer, greener world. We don’t just look at how they operate, but what they do – and how that activity directly supports a more sustainable future. 

ESG vs Impact Investing: a quick comparison 

Why choose Triodos Impact Investments? 

Triodos Investment Management, the investment arm of Triodos, has pioneered impact investing for over three decades. When you invest with us, your money supports businesses and projects that are driving real change. 

Our funds are independently rated for both sustainability and performance, so you don’t have to compromise between your values and your financial goals. 

We focus on five key transitions essential to a sustainable future – Food, Resource, Energy, Society, and Wellbeing – all aligned with the UN Sustainable Development Goals. Our impact management cycle ensures we continuously measure, monitor, and improve the outcomes of our investments.  

Remember, these are long-term investments (five or more years), as the value of your investment may go down as well as up. Currency fluctuations may also affect the value of your investment.