The current terminology around extra-financial risks and opportunities in investment have been useful for defining and differentiating approaches. But now they have come of age, the complimentary nature of these approaches is the more important consideration to convey.
It’s a point recognised by more and more investors who are demanding the integration of key impact performance indicators into fundamental ESG analysis. As such, we expect ‘impact’ to move from the margins of responsible investing to the heart of mainstream investing and become the dominant terminology.
Impact investing is part of, but augments, the traditional understanding of risk and return that governs all parts of a portfolio.
Bertrand Gacon is head of impact investing at Lombard Odier
