Assets How to invest sustainably

Investors can pursue three different approaches to sustainable investing: 

The exclusion method: exclude companies and sectors

With the exclusion method, you eliminate from your portfolio all the companies and industries that are not in line with your values. For example, you can exclude investments in companies that are involved in the defense or tobacco industry. 

Investing according to environmental, social and governance criteria (ESG criteria)

The second approach is the inclusion method. Only companies that meet certain sustainability criteria are considered. ESG criteria are usually taken as a guide.
The acronym ESG stands for environmental, social and governance:

• E for Environmental, i.e. ecological aspects.
• S as in Social, i.e. social activities, both internally and externally. 
• G for Governance, i.e. the way the company is managed.
  

Investment according to ESG criteria is currently widespread. This is because this approach allows you as an investor to structure your portfolio according to your personal values and goals, whilst evaluating companies according to ESG issues.

UN’s 17 sustainable development goals are often used as a basis for this evaluation. These goals include no poverty, gender equality, clean water and responsible consumption.

For example, the ESG criteria of an investment are met if a company actively reduces its own CO2 emissions (E), ensures good working conditions, is socially committed (S) and applies diversity principles for its Board of Directors (G).

Impact investing: pursuing measurable ecological and social objectives

Impact investing means attempting to achieve a measurable ecological and social impact with your investment as well as seeking return opportunities. This measurement of the social or ecological effect is the key element of impact investing. At the same time, however, it also makes the investment and reporting process very complex, which is why widely available, profitable investment opportunities are limited.