What is impact investing?

Impact investing is defined as an investment strategy that seeks to generate both social and environmental impact alongside a financial return. This approach goes beyond traditional investing by intentionally targeting investments that produce measurable positive outcomes in areas such as community development, environmental sustainability, and social equity while still aiming for financial profitability. The dual focus on creating beneficial societal outcomes and achieving acceptable returns distinguishes impact investing from other investment approaches.

The other options do not reflect the dual objectives central to impact investing. The first option focuses only on financial profit, which eliminates the critical component of social or environmental responsibility. The second option disregards social implications entirely, which runs counter to the goals of impact investing. The last option limits the scope to real estate, which is too narrow and does not encompass the broad range of sectors where impact investing can occur. Therefore, the correct characterization of impact investing emphasizes the combination of profitability with positive social and environmental outcomes.