Sustainability matters to investors as investment portfolios face significant risks from climate change and global warming. As the world shifts towards a low-carbon economy, new climate-friendly business models will also open up investment opportunities. With many people interested in using their wealth to protect the natural world and push for sustainable change, learning more about sustainable investing is a good place to start.
The sustainable investing spectrum
Investors can invest sustainably through a number of different approaches. The sustainable investment universe offers a spectrum of strategies so investors can build a portfolio based on personal goals, values and risk appetite.
Avoiding harmful investments that don’t match your values. Investors can choose to actively exclude sectors or companies in controversial business areas – for example, weapons or tobacco.
Using data on environmental, social and governance factors alongside traditional financial research when evaluating risks and opportunities of an investment decision.
Allocating capital to gain exposure to high impact, and often high growth, companies that place the UN SDGs at the center of their purpose and operations.
Where an investor is allocating capital with the explicit intention of having a positive, measurable social or environmental impact, in addition to financial returns.
Donating money to address societal challenges without generating a financial return.
How does sustainable investing work?
Sustainable investing works by identifying companies that are finding ways to turn the world’s big problems into profitable business models. Companies may do this through developing new technology or materials, or by looking at society from a different perspective. This innovation leads to solving a problem while generating profits at the same time. In turn, companies can make a positive contribution to the communities and local economies where they operate.