Unlike more traditional ESG approaches, sustainable investing does not just rely on shareholder influence to do good while producing competitive returns. It also achieves positive outcomes via investment selection, portfolio management, and where needed, contractual arrangements.
With impact investing, meanwhile, doing good becomes the goal in itself and there is a clear link between invested money and measurable outcomes. As with sustainable investing, this relationship is positive, but here it is more fluid. Impact investing targets market returns. So-called impact-first investing requires a trade-off.
DWS believes sustainable and impact investing produces better results versus mainstream ESG approaches. Specifically, there is a bigger positive impact, results are predefined, transparent and quantifiable, risk adjusted returns are improved, as is diversification.
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