For many affluent individuals and families, leaving the world a better place forms a core value. Leveraging wealth in ways that support various important causes thus becomes a key avenue for mission alignment between financial strategy and the desire for making a positive difference in the community and society at large.
Meaningful philanthropic efforts have traditionally been a key component for those seeking to leverage wealth to accomplish good in the world. But more recently, impact investing—positioning assets in companies perceived as furthering certain desirable social, environmental, and other initiatives—is gaining ground with investors who wish to extend the influence of their resources in tandem with their ethical and social beliefs. Simply put, impact investing is based on a desire to make money and do good at the same time.
What is impact investing?
Impact investing is a form of investing that aims to generate a measurable social or environmental impact in addition to financial returns. Impact investing focuses on investing in companies or organizations that are working to solve social or environmental problems, such as climate change, poverty, or access to healthcare. Impact investors evaluate the potential impact of their investments using a variety of metrics, such as the number of people reached or the number of carbon emissions reduced.
Impact investing is different from traditional philanthropy in that it is not just about giving money away but about obtaining equity in organizations that are creating positive change. It can also offer the potential for financial returns and has become increasingly popular as more and more investors seek to align their investments with their values.
In recent years, the growth of global participation in the impact investing market has been considerable. In 2025, some $100 billion in assets was committed; this is expected to grow to an estimated $119 billion in 2026 and is projected to exceed $400 billion by 2033.
Impact investing can encompass two different approaches:
- ESG investing—investing in companies that operate according to certain environmental (what the company does or refrains from doing to protect the environment), social (how well the company treats employees, customers, suppliers, and society at large), and governance (corporate leadership’s ethical approach to the business and stakeholder relations) guidelines. Sometimes also referred to as “sustainable investing,” ESG investing is driven by the idea that companies that perform well on ESG metrics are more likely to be sustainable over the long term and may offer better returns for investors.
- SRI investing—socially responsible investing that considers social and ethical factors alongside traditional financial metrics. SRI investing primarily aims to generate financial returns while supporting companies that align with the investor’s values.
Why should I consider impact investing?
Achieving mission alignment between your portfolio and your values can be a powerful way to impact the world positively. Each of the investment approaches discussed above have unique benefits and considerations. Impact investing allows investors to invest directly in organizations that solve social and environmental problems: ESG investing provides an opportunity to consider sustainability and ethical practices while still achieving financial returns; SRI investing enables investors to avoid companies that do not align with their values and actively invest in those that do.
Ultimately, choosing any of these approaches will depend on your values, overall financial and community-oriented goals, risk tolerance, and time horizon. It’s essential to do your research and discuss your desired outcomes with a financial advisor. This will help to determine the best investment approach for you and whether these types of investments make sense for you and your family.
At GEM Asset Management, we understand the importance of achieving alignment in your vision for how your wealth can impact not only you and your family, but society and the world at large. If you’d like to learn more about impact investing and how it can fit into your overall financial strategy, let’s get the conversation started.
