What does the term "impact investing" refer to?

The term "impact investing" refers to a specific investment strategy aimed at generating positive social or environmental effects in addition to financial returns. This approach acknowledges that investing can serve dual purposes: achieving profitability while also contributing to societal progress or environmental sustainability.

Investors who engage in impact investing actively seek opportunities that align with their values and objectives beyond mere financial metrics. For instance, they might invest in renewable energy projects or companies that promote education and healthcare in underserved communities. This makes impact investing a powerful tool for driving change while still adhering to responsible fiscal governance.

The other options represent traditional forms of investing that prioritize financial profit without consideration for social or environmental effects, reflecting a more conventional investment mindset. These approaches do not capture the essence of impact investing, which is fundamentally about aligning financial investment with positive societal outcomes.