The acronym ESG is in the media and in investment prospectuses. Investors put about four times as much money into ESG investment funds in 2020 as in 2019. ESG impact investments jumped from $502 billion in assets under management in 2019 to $715 billion in 2020. There is no doubt that impact investments and ESG offer attractive financial returns while helping to build a better world.


ESG investing is an approach that incorporates environmental, social and governance factors into decisions throughout the life cycle. Bain & Company makes a useful distinction between funds that are ESG "risk mitigators" and those that are ESG "opportunity seekers."

1) Risk mitigators use ESG considerations to a limited extent to assess and manage potential risks during due diligence and ownership.

2) Opportunity seekers look for investment opportunities that support environmental, social, or governance progress.

Companies that envision a net-zero future are proactively transitioning to a low-carbon footprint and reducing their energy costs. Companies that are making their workplaces inclusive and supporting employees are developing productive workforces over the long term. Those with independent and diverse boards along racial and gender lines will make better risk management decisions and allocate capital more efficiently. Doing the right thing can be profitable for both companies and investors.

What differentiates impact investing?

Impact investments are made with the intention of generating positive and measurable social and environmental impacts, along with a financial return, according to the definition of the Global Impact Investing Network.

Based on IFC's Operating Principles for Impact Management three criteria must be true for the investor for an investment to have genuine impact:

1) The investor intends the impact, articulating specific outcomes that will be sought through the investment and specifying who will benefit from those outcomes.

2) The investor contributes to impact when the investment helps achieve the intended results.

3) The investor's contribution can be financial, through flexible capital, or non-financial, such as portfolio support.

It is important to test whether an investment will actually make progress by analyzing company data and available social science research. The impact should meet significant social and environmental goals, such as the UN Sustainable Development Goals. Perceived impact should be an integral part of the company's business model.

The relationship between impact and business model, the last criterion, can take many forms. A company's core products and services may have impact, or the company may have found a way to produce goods and deliver services that is cost-effective and better for the world. The point is that integration ensures that impact will remain central to the company's long-term strategy.

Both ESG investment and impact investing play essential roles in achieving the UN SDGs and building a fairer world for all.

SB SUSTAINABLE BUSINESS SOLUTIONS is an ESG Tech. Today recognized as the only automated, data-driven solution for external risk monitoring and materiality analysis to serve your company and your supply chain.

With ESG DATA INTELLIGENCE, we capture data that becomes information for decision making as well as monitoring for the financial market with audited evidence.

We have a team of professionals that encompasses the areas of Auditing, Consulting, Risk Advisory, ESG Performance Procurement, Value Chain and specialists from various industries and sectors with extensive experience and business knowledge!