Sustainable investing is an approach to investing whereby an investor incorporates ESG (Environmental, Social, and Governance) factors into investment decisions. An investor who practices sustainable investing invests in funds, companies, and organizations to generate measurable environmental and social impacts together with a financial return. Impacts extend to various sectors, from climate change and renewable energy to community development, health, and safety.
Below, we discuss why sustainable investing has become popular and why investors should consider investing sustainably.
1. Contributes To a Better World
Sustainable investing has become popular because it helps contribute to a better world. As an investor, you can invest your capital in a way that influences a company to move toward a sustainable future.
It is no secret that we are facing a huge challenge in regard to climate change. To successfully tackle this issue, companies need to change how they operate, and as an investor, you have the power to influence how they operate. From the smallest individual investor to the largest asset manager, you can choose to support a sustainable company.
2. Allows Investors to Invest in what they Believe In
Some individuals want to change the world but do not know how. Sustainable investing is one way to foster change. Instead of talking about how alcohol is affecting adolescent development or how climate change is affecting the environment, you can do something to help change the situation.
Also, for most investors, personal values are very important. If an issue is stressing you out, let’s say racism, deforestation, or gender-based violence, you can invest in a fund or company whose portfolio addresses such issues.
3. Allows Investors To Reward Ethical Companies
Your investment may seem like a grain of sand in a vast desert, but cumulatively, it can bring about the change that is needed in the world. For example, when more and more investors invest in an ethical company, the company gets the financial muscle it needs to address contentious issues.
On the other hand, sustainable investing means refusing to collaborate with companies you consider unethical. When more investors do this, they make such companies capital-deprived. With time, more companies will jump on the sustainable bandwagon, creating the needed impact on the planet.
4. Sustainable Investing Has Financial and Environmental Benefits
We all know that environmental concerns are changing the world, but did you know that being environmentally friendly brings financial benefits?
Many established companies have realized that conserving resources keeps the earth beautiful and reduces costs. For example, Apple has committed itself to use 100 percent renewable energy and is now carbon-neutral. By switching to renewables and leaving off fossil fuels, Apple is saving over $80 a year. Moreover, Apple’s decision to embrace sustainable investing has brought about many environmental benefits, including reducing emissions, conserving resources, and promoting water management.
Try Out Sustainable Investing To Make an Impact
Companies cannot solve contentious issues overnight. However, when investors invest sustainably, they can help turn the tide, bringing about fundamental change. Moreover, investing sustainably has become popular because it helps investors and companies work towards a brighter future.