Sustainable Investing

As the world is becoming more and more aware of the environmental movement and the detrimental effects that our human activities have long created on our earth, we have seen a rise in interest in sustainable investing. The SIG team had the opportunity to consult a professional in the industry to learn more about sustainable investing and what exactly it entails.

As its name suggests, sustainable investing is a broad term that encapsulates various types of sustainable impact and ESG integration approaches that incorporate environmental, social and governance considerations in the investing process. It is the idea of supporting companies whose practices are beneficial to the environment and excluding those that do not have these practices.

There are multiple aspects to sustainable investing. Impact investing generates measurable social or environmental benefits, whereas socially responsible investing (SRI) are types of investments that align with an individuals’ core personal values that reduce the negative consequences in that particular field of interest. Another aspect of sustainable investing is climate investing, which contributes to low-carbon investments and other forms of activities that help to reach “net zero” climate targets. Lastly, ESG integration considers Environmental factors such as pollution and climate change, Social factors such as human rights and diversity, and Governance factors such as anti-corruption, task transparency and risk management to cultivate long-term calculated returns.

The process of sustainable investing is one that is beneficial for many reasons. The first is that it allows stakeholders to hold companies accountable and encourage ethical and sustainable practices. It also allows investors to invest without compromising on their personal values and morals. Lastly, it allows investors to support and put in capital towards companies conducting practices that lead to the change that they would want to see in the world. However, while the act of sustainable investing reaps many benefits for not just the earth but also the investor, it doesn’t come without its drawbacks either. Sustainable investing is very personal to an investor, and is not one size fits all. Furthermore, when companies prioritize sustainability, this might be at the cost of profitability or could lead to greenwashing- a practice in which companies pretend to be more sustainable than they actually are.

There are many ways to get started in sustainable investing, research is the most important thing when it comes down to it. As an investor, one must identify the platform they want to use, the values they identify with, and the companies whose ESGs align with theirs. As climate change worsens and the detrimental impacts of human activities are felt more and more each passing day, we must move towards corporate activities that are more eco-conscious. Sustainable investing could just be the right step towards that.