Sustainable Investing

Sustainable investing is an approach to investing that uses environmental and social factors to create a portfolio that aims to achieve both financial returns and positive societal and environmental impact. This is the practice of intentionally investing your money in companies that have demonstrated their commitment to advancing a sustainable future, and it's here to stay.

Over the years, the investment community has had various terms used to describe this particular investment philosophy. These include ESG (Environmental, Social, and Governance), Impact Investing, and socially responsible investing (SRI).

Why is sustainable investing important?
Sustainable investing has been around for decades in various forms—through socially responsible investing, shareholder activism, community investing, impact investments, and others.

Today, sustainable investing is emerging as an inclusive approach for all investors who want their investment strategies to be aligned with their values. It recognizes the role of business in society and seeks to balance financial returns with positive impacts on society and the environment.

Is sustainable investing profitable?
When you start a sustainable fund, it's important to remember that it's just like any other investment: there are no guarantees.

Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.

What are the 4 strategies of sustainable investing?
Sustainable investing incorporates environmental, social, and governance (ESG) criteria into the investment process.

Investors can integrate ESG criteria into their portfolios in several ways:

• Exclusionary/ Negative screening: Investors may choose to avoid certain activities by excluding companies that derive revenues from specific business lines, or that are involved in controversial products or services. For example, an investor may wish to exclude certain industries, such as tobacco, alcohol, or gambling, from an investment portfolio.
• Best-in-class approach/ Positive screening: Investors may choose to invest only in companies that have been identified as leaders within their peer groups on ESG criteria, such as outstanding performance on disclosure practices and/or demonstrated leadership on key issues.
• Impact investing: A subset of sustainable investing focuses on making investments to generate measurable positive social and/or environmental impact alongside a financial return.
• ESG Integration: ESG criteria are used to filter out companies based on their environmental record, their treatment of employees and other stakeholders, and corporate governance policies and transparency.