* Allianz Global Investors sets up impact investing unit

* Focus on investing in companies with measurable ESG impact

* Impact investing increasingly in demand among investors

LONDON, Jan 26 (Reuters) - Asset manager Allianz Global Investors, part of German insurer Allianz, said on Wednesday it had set up a new unit focused on 'impact' investing in private markets, as part of a sustainable investing drive.

AllianzGI, which manages around 647 billion euros ($730.27 billion) in assets, will look to invest in private companies helping solve environmental or social issues in a measurable way, it said in a statement.

Interest in companies performing better on such measures has surged in recent years as more investors expect such investments to reduce risk and drive stronger returns, particularly as the world transitions to a low-carbon economy.

Impact investing, meanwhile, takes that a step further by tracking the impact of the investments on people and the planet, not just the company's returns.

The new team of 12 will be overseen by Matt Christensen, Global Head of Sustainable and Impact Investing, AllianzGI added.

"Investors want to see a positive change for the planet while generating a return, and impact investing offers a solution to these twin goals," Christensen said.

AllianzGI said it was also creating a new "Impact Measurement & Management" team, led by Diane Mak to help select the investments and assess their impact.

"The future growth trajectory of impact investing depends on asset managers demonstrating how the impact can be measured and reported," Christensen said.

The COVID-19 pandemic drew attention to deepening social inequality which brought impact investing to an "inflection point," the head of Singapore's Temasek Holdings said last year.

Last week, Swedish private equity firm Summa Equity said it raised $2.6 billion for Europe's biggest-ever impact fund.

The Texas-based private equity firm TPG, which went public earlier this month with a more than $10 billion valuation, also has an impact investing arm, and raised a $5.4 billion for its first climate-focused impact fund.

The fund, called TPG Rise, recently led a $170 million funding round in Israeli cleantech company UBQ Materials, which turns household waste into bio-based plastic for use in industries such as construction and carmaking.

AllianzGI's announcement comes as Tibetan activists demand that the group drop its sponsorship of the Beijing Winter Olympics over allegations of human rights abuses in China.

Allianz said it had been in contact with activists and that it was committed to supporting the values of the Olympics.

($1 = 0.8860 euros) (Reporting by Simon Jessop; additional reporting by Elizabeth Howcroft Editing by Tomasz Janowski)