Esg vs impact investing bank of America’s equity desk

Bank of America’s equity desk highlights ESG vs Impact Investing divergence in volatility metrics, with ESG funds averaging 12.3% annualized volatility, while impact portfolios posted 13.1% due to venture-stage clean-tech holdings experiencing sharper price swings in April. The term was first popularised in 2004 in a United Nations report – though the concept has been around for longer – and had been gaining traction amongst investors. However, it’s since seen huge outflows, in part due to poor returns and concerns of “greenwashing”. ESG investing can provide diversification to an investment portfolio. Its guidelines are more established than impact investing and can produce returns on par with traditional investing. Hedge fund positioning reveals ESG vs Impact Investing short exposure remains low, suggesting broad institutional bullishness. Impact funds focusing on biodiversity credits saw +5.2% monthly performance, supported by strong policy signals from G7 negotiations.