Sustainable Investing: What is It, Exactly?

Julie Starr • May 26, 2020



A growing number of investors focus on sustainable organizations and eco-friendly projects. You may have heard about sustainable investing but aren’t sure quite what it means. If so, these details can help you.

Defining Sustainable Investing

Building wealth through sustainable investing involves putting your investment in the future. Essentially, as an investor, you are putting your money toward companies that dedicate themselves toward challenges that impact the world’s future.

By investing in this way, your money can go toward helping future generations and creating a better world for those who are here now too. It’s also a smart investment given that caring for the future is never going to go out of style.

By taking this approach, you have a bigger purpose than only profit. You consider social, environmental, and governance (ESG) insights with traditional processes to create outcomes over the long-term.

Deciding Where, When, and How to Invest

Whether you are a new or more experienced investor, making decisions about investment strategies can feel overwhelming. To help make the process easier, tap into online resources for investors and landlords . Look for resources that update often so you always get the latest information to reflect the current landscape.  You could look at the latest indices trading options, for example.

Sustainable Investing: Three Main Considerations

For your long-term investment outcome to be positive, you as the sustainable investor will consider:

Environmental

Climate risks and clean energy are key considerations here.

Social

Human rights and cybersecurity are two examples.

Governance

Business ethics and, at the opposite end, corruption, are among the ones to consider.

Putting Value on Sustainable Investing Assets

The 2018 Global Sustainable Investment Review found the value of sustainable investing assets is growing worldwide and has been since 2016. Europe has the highest concentration of this type of asset globally, totaling 14.1 trillion.

That same report identified the US as the second biggest region based on its value on sustainable investing assets. The assets went from $8.7 trillion in the beginning of 2016 to $12 trillion just two years later.

Japan’s numbers also increased significantly, quadrupling from 2016 to 2018. That makes Japan the third largest sustainable investing center, on the heels of Europe and the US.

While sustainable investments are not new, the popularity of them is a recent trend. Many investors are starting to realize the benefits of investing for impact.

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