What is sustainable investing?

Satunnainen

Sustainable investing is an investment strategy that takes into account factors related to the environment, society and governance (ESG) in addition to financial returns. This approach seeks to combine financial success with responsibility so that investments can generate long-term value for both investors and society at large.

What does sustainable investing mean in practice?

Sustainable investing can manifest itself in many different ways and includes several different strategies. Here are some of the more common approaches:

  • Negative screening: Exclusion of certain industries or companies from the investment portfolio, for example the tobacco industry, arms manufacturers or fossil fuel producers.
  • Positive screening: Investing in companies that meet certain sustainability criteria, such as renewable energy producers or companies with strong environmental and social responsibility programs.
  • Impact investing: Investments designed to produce measurable positive social or environmental impacts in addition to financial returns.
  • ESG integration: Inclusion of environmental, social and governance-related factors in traditional investment analysis and decision-making.
  • Participatory ownership: Investors use their ownership rights to influence the operations of companies, for example by voting at general meetings or engaging in dialogue with company management.

Why is sustainable investing important?

Sustainable investing is important for many reasons:

  1. Risk management: Considering ESG factors can help identify and manage risks that can affect the long-term success of companies.
  2. Improving returns: Studies have shown that companies investing in sustainability can offer competitive or even better returns compared to traditional companies.
  3. Social impact: Sustainable investing can promote positive changes in society and the environment, for example by reducing carbon dioxide emissions or improving working conditions.
  4. Investor values: Many investors want their investments to reflect their personal values ​​and ethical principles.

Sources

You can find more information about sustainable investing from the following sources:

, ,