Sustainable investing takes into account ecological, social and ethical business factors, using a variety of investment forms and strategies. It lets you have a positive influence on the world - without having to sacrifice returns.
Thanks to this, sustainable investments are increasingly popular and constantly growing in number.
The area of sustainability is expanding faster than the financial sector as a whole. This is because the attitudes of consumers, employees, investors and society are clearly changing: companies are being held to a higher standard.
Sustainable investments (SI) are part of a rapidly rising global trend now playing an increasingly important role in investment decisions.
Climate change, demographic trends, and water, energy and food scarcity, as well as malnutrition, are just some of the problem areas moving into the spotlight across the world. There are huge challenges and uncertainties to overcome. But this also means great potential and investment opportunities. And we can take advantage of these today.
Sustainable investing differs clearly from philanthropic activities, which are dedicated exclusively to social development.
Carefully selected sustainable investments using strict criteria offer the same return opportunities as comparable forms of investment. They’re also comparable with traditional investments in terms of risk. Sometimes they can even help improve a portfolio’s risk profile, since including additional criteria in the financial analysis of a company or organization gives a broader overall picture.
Three ways to invest sustainably
There are three different approaches you can choose, depending on your values and wishes:
- Exclusion of controversial activities (e.g. arms manufacture)
- Integration of ESG criteria in the financial analysis
(Environment, Social and Governance factors)
- Impact investing
We can tailor your portfolio to your specifications, which means you can choose not to invest in certain, sometimes controversial, industries and products. For example: no weapons, no tobacco products, no gambling, and no nuclear power production.
Integration of ESG criteria
If you choose to integrate ESG criteria, then factors come into play such as a company’s "environmental footprint" and any air or water pollution it causes, the composition of a company's board of directors, and/or social aspects like employee rights and safety at work.
With impact investing, you choose investments with a clearly defined, positive social impact. For example, an impact investor may invest in bonds used to finance a particular social development (e.g. research on a diabetes drug), or may decide on carefully selected private equity investments such as small business loans in developing countries.
Typically, impact investments are additions to a portfolio.