Sustainable investing is on the rise as investors become more and more interested in finding smart ways to invest their money. By definition, sustainable investing refers to any investment strategy that seeks to preserve or grow capital while taking into account environmental, social, and corporate governance (ESG) factors.
In other words, sustainable investors are not just looking not just at the financial performance of a company. They are also looking at its impact on people and the planet.
The importance of investing in a sustainable future
As our world becomes increasingly industrialized, the need for sustainable development becomes more pressing. While it may be tempting to focus solely on short-term gain, the reality is that investing in a sustainable future is essential for the long-term health of our planet.
Climate change is already causing devastating effects across the globe, and if we don’t take action now, the situation is only going to get worse.
By investing in greener technologies, we can make money, help to reduce our reliance on fossil fuels and slow the progress of climate change.
In addition, sustainable development helps to create jobs and foster economic growth. So it’s not just good for the environment, but investing in a sustainable future is also good for the economy. With so much at stake, there’s simply no excuse not to act now.
Is sustainable investing the same as ESG investing?
There are a lot of talks these days about sustainable investing, but what does that really mean? And is it the same thing as Environmental, Social, and Governance (ESG) investing?
In a nutshell, sustainable investing refers to an investment strategy that seeks to generate both financial returns and positive social or environmental impact.
For example, a sustainable investor might invest in companies that are working to reduce their carbon emissions or develop renewable energy sources. Alternatively, they might invest in companies that are committed to diversity and inclusion or have strong governance practices.
ESG investing is similar, but with a focus on three specific areas: the environment, social issues, and corporate governance. An ESG investor might, for example, invest in companies with good environmental records or those that are working to reduce their carbon footprint.
They might also invest in companies with strong social policies, such as those that support employee rights or have programs in place to help employees balance work and family life. And finally, they might invest in companies with good governance practices, such as those with transparent decision-making processes and effective risk management procedures.
So, which is the better approach? That depends on your goals as an investor.
If you’re primarily interested in financial returns, then ESG investing may be the way to go. But if you’re also interested in making a positive social or environmental impact with your investments, then sustainable investing may be a better fit for you.
Either way, it’s important to do your research and make sure you’re comfortable with the approach you’re taking.
How to get started investing sustainably
To get started investing sustainably, there are three main options:
- Direct investments in alternative peer to peer platforms
- Investments in sustainable companies listed on the stock exchange
- Make an investment in your own things
1. Direct investments in alternative peer to peer platforms
A great way to get started investing sustainably is by making direct investments in alternative peer to peer (p2p) companies (specifically in the energy sector) like The Sun Exchange, Trine, and Switchr. These three platforms allow for smaller investors with limited funds or expertise to access the market without having large amounts at stake should prices drop significantly- which they usually do.
However, investments in these platforms are not for the feign hearted. Problems include that these small businesses are new, which means there’s not much regulation for them yet; plus, many would-be investors lack the necessary knowledge about how this market works or what types of risks they might face when taking on such an investment opportunity.
The Sun Exchange
The Sun Exchange is the peer-to-peer solar leasing marketplace that enables anyone, anywhere in the world to buy remotely-located solar cells and then lease them to power businesses and organizations in sunny emerging markets.
Solar cell owners earn income from the electricity that’s generated, while schools, businesses, clinics, and other organizations gain access to affordable clean energy, reducing electricity costs and carbon emissions.
Trine makes it easy for people to invest in solar energy in growing markets. Their mission is to give people a triple return on investment – earn a profit while making a social and environmental impact.
Trine is the only company that offers an equity crowdfunding model. This means that everyday people can invest in their projects.
Switchr is the global movement and solar investment platform where you can engage in the great energy revolution while making an income. The platform believes that everyone should have access to clean and renewable energy. Their mission is to make it easy for anyone to participate in the switch.
With over 100,000 installations worldwide, Switchr has made it simple for people to invest in solar energy and earn a passive income.
2. Investments in sustainable companies listed on the stock exchange
Many companies now place a focus on the environment, and this has led to an increase in investments in sustainable companies. These companies are often listed on the stock exchange, and they offer investors the opportunity to get involved in environmentally friendly businesses.
You can invest in these companies in many different ways, but one of the most popular is through green exchange-traded funds (ETFs). Green ETFs are funds that invest in companies that have a positive ESG rating. This means that they are companies that are doing their part to make the world a better place.
When choosing an investment, it is important to consider the ESG rating of the company. This will ensure that you are investing in a company that is making a positive impact on the world.
Importance of ESG when choosing investments
In recent years, more and more investors have been turning their attention to ESG factors when making investment decisions. One major reason for this shift is the growing awareness of the financial risks associated with climate change. Another is the increasing belief that ESG-focused companies tend to outperform their less sustainable peers over the long term.
There is still some debate about the best way to measure and incorporate ESG factors into investment portfolios. But, there is no doubt that they are becoming an increasingly important consideration for responsible investors.
For those looking to add some sustainable funds to their portfolio, you could look into the top sustainable investment funds that Morningstar recently listed.
3. Make a sustainable investment in your own life
One way to get into sustainable investing is to make an investment in your own personal things, i.e. your house or property.
There are many things that you can invest in, including:
- the installation of solar panels or wind turbines to reduce electricity costs
- changing your electricity provider to someone sells renewable energy
- appliances that use less water and energy.
The world is changing and the time to invest in sustainable solutions is now. But, with so many options available, it can be difficult to know where to start.
By following a few simple tips, you can begin investing in a more sustainable future today.
So, what are you waiting for? Start exploring your options and make a difference for generations to come.