Which of the following best describes impact investing?

Impact investing is best described by the intention to generate social and environmental impact alongside financial returns. This definition highlights the dual objectives of impact investing, where investors not only seek financial profits but also aim to address social and environmental challenges. This approach is aligned with the principles of sustainable investing, which focus on creating positive change while still achieving monetary gains.

The essence of impact investing lies in actively seeking investments that have a measurable positive effect on society or the environment. This could involve supporting renewable energy initiatives, funding projects that promote education, or investing in companies that uphold ethical practices. By integrating these impacts with financial goals, impact investors can contribute to solutions for pressing global issues while still maintaining a financial interest in their investments.

In contrast, the other options do not capture the comprehensive nature of impact investing. Investing exclusively in high-growth sectors may lead to exceptional financial returns but does not guarantee any social or environmental impact. Ignoring ESG factors when selecting investments overlooks crucial criteria that could lead to detrimental outcomes for society and the environment. Finally, basing investment decisions solely on financial metrics neglects the growing recognition that sustainability and responsibility are vital to long-term success in today’s investment landscape. Thus, option B encapsulates the true spirit of impact investing, showcasing its focus on both