How does impact investing relate to private equity?

Impact investing is fundamentally about generating measurable social and environmental benefits alongside financial returns, which aligns precisely with the aim highlighted in the correct answer. It represents a strategy in the investment landscape, particularly relevant within private equity, where investors seek to allocate capital in a manner that not only seeks a financial profit but also addresses social issues or contributes positively to environmental goals.

In private equity, this approach allows investors to target companies that are not only expected to yield solid financial returns but also have a social purpose or mission, such as improving access to essential services, promoting sustainability, or supporting community development. Such investments are evaluated not just based on traditional financial metrics but by their ability to impact society and the environment positively.

This nuanced understanding of success, encompassing both financial and impact outcomes, differentiates impact investing from other investment strategies that might focus solely on profit. Thus, the correct answer reflects the essence of impact investing's dual focus on creating value across multiple dimensions, crucial for private equity investors who wish to align their portfolios with broader societal goals.