The world is a complicated and challenging place to live in. There are so many problems that need fixing; unemployment, poverty, hunger, diseases like cancer and Alzheimer’s, water scarcity, climate change.
All of these issues have left us wondering what we can possibly do about it. And the stress doesn’t end there because it does not stop there either. We have been noticing a worrying trend of people being more interested in trivial things than real issues that matter. This has led to a recent outburst of concern over mankind’s future and whether we are really going to make it through this century or not.
It therefore shouldn’t come as a surprise that sustainable investing has risen in popularity as an effective way for individuals to make an impact on the world around them and combat some of the greatest threats facing humankind today.
If you’re interested in learning more about making an impact through investing, keep reading!
What Is Sustainable Investing?
Sustainable investing is an investment strategy that considers the long term health and ecological impact of the companies in which investments are made.
Sustainable investing is based on the understanding that the environment, society and the economy are inherently linked, and that long term business success and investor returns are inextricably linked to positive social, environmental and governance (ESG) impacts.
Sustainable investing can be applied to all asset classes, investment styles and investment strategies—including equity, fixed income, public and private debt, venture capital, real estate and impact investing strategies.
Benefits of Sustainable Investing
Sustainable investing can lead to better investment performance in several ways.
First, sustainable investing forces investors to shift their focus from short-term earnings to more long-term value creation. Sustainable investors understand that the companies that create a more sustainable world are the ones that will be the most successful over the long term.
Secondly, a sustainable focus leads investors to demand greater transparency from companies, including disclosure of material risks, policies and impacts related to environmental, social and governance issues. As a result, long-term investors are likely to receive better treatment from companies.
A sustainable focus leads investors to seek out companies that are positioned to profit from the transition to a low-carbon economy, including through investments in clean technologies, energy efficiency, resource efficiency, low-carbon transportation and the development of a low-carbon economy. Such investments can not only make a positive change in the world today, but also help build a portfolio’s long-term resilience.
How to Get Started on Sustainable Investing
If you’re interested in sustainable investing, the first step is to determine your objectives – what do you hope to achieve with your investment strategy?
Once you’ve identified your goals, you can begin to explore sustainable investing strategies that are appropriate. If you’re a private investor, you can choose from an array of online portals that provide information on sustainable investing strategies and companies.
And don’t forget that you don’t need to implement your sustainable investing strategy all at once. You can begin with a portion of your portfolio and then increase the percentage over time as you get more comfortable with the approach.
The Bottom Line
So much of what we read about the environment is tremendously depressing. From melting ice caps, to polluted rivers, disappearing species and irreparable damage to natural habitats, the outlook seems bleak.
Humankind has a choice – continue down the path towards self-destruction or take action to reverse current trends and create a more sustainable future.
Thankfully, responsible investing can have a huge impact on companies and the world at large. With a little effort, you can learn to apply sustainable investing principles to create a better investment portfolio and make a real difference for the world.