Sustainable and Responsible Investing (SRI) uses relevant ESG criteria to choose companies for investment, typically based on a negative screening approach to exclude companies that produce or sell harmful substances, like tobacco, and those that engage in harmful activities, such as polluting or violating human rights. SRI doesn’t necessarily include positive screening to include companies that engage in beneficial activities, such as using sustainable practices, or producing clean technologies. There are attempts to establish standards and indexes in areas like climate change and human rights to further facilitate such investments.

       In ethical investing, investments are selected or excluded according to the individual investors’ personal beliefs and values. Similar to SRI, ethical investing may exclude investments in certain industries (such as firearms) and is connected with the movement to divest from fossil fuel companies. The key difference with SRI is that ethical investing tends to be more issue-based and produces a more personalized result, whereas SRI normally uses one all-encompassing set of parameters to select investments.

       Impact investing goes a step further by intentionally looking to produce both financial return and positive social or environmental impacts that are actively measured, so it’s much harder to apply ESG factors. Impact investors attempt to generate specific, positive impacts using financial instruments, and then require the companies to report evidence that the impacts have really been produced. It’s distinct from SRI in that it seeks positive impacts associated with areas such as renewable energy, sustainable agriculture, water management, and clean technology. Many of the independent companies or funds in such areas may not have specific ESG ratings. Moreover, measuring the actual social and environmental impact is difficult, and a standardized measurement system (the Impact Reporting and Investment Standards, or IRIS) has been developed to