What is sustainable investing?
People are more engaged with social and environmental issues than ever before – and that’s increasingly having an influence on their financial decisions.
What’s more, sustainable investing is another option that some are increasingly choosing to explore.
So what exactly is sustainable investing and what does it mean?
Well, sustainable investing is a general term that covers various investment approaches, each of which aims to lead to positive social, ethical or environmental outcomes, alongside healthy long-term financial returns.
These can include:
- Investing in companies that act ethically and sustainably
- Investing in environmental projects, such as renewable energy infrastructure
- Putting money into cooperatives and social enterprises
- Supporting recycling initiatives
- Investing in businesses that seek to innovate or act on issues such as climate change and global inequality
Of course, a natural question to ask is whether investors who consider these issues will earn the same level of returns as those who don’t. But it’s worth pointing out that there is no guarantee when it comes to any type of investments, sustainable or not.
You’ll be well aware that markets will go up and down across all industries, and countless factors can lead to a boom or knock them off course. These are the simple realities of investing across all asset types.
A relevant factor to consider, however, is that environmental, social and governance matters can have an effect on share prices, which could mean some sustainable investments are more resilient than others, and could therefore deliver more lucrative returns.
Sustainable investing has dual benefits – attractive returns and positive environmental or societal outcomes – and that can be appealing to many people.
And as the focus on sustainability grows among consumers and businesses alike, this approach looks set to gain momentum as time passes.
But given the lack of any guarantees, it’s a good idea to get advice from a professional financial adviser, who can talk you through various investment options and discuss the level of risk you’re prepared to face.
At the same time, they can help you make sure that any sustainable investments you pursue are compatible with your wider financial and lifestyle goals.
If you have any questions about sustainable investing or want to expand your portfolio to include sustainable options, please don’t hesitate to get in touch with us.