A beginner's guide to sustainable investing
Retrieved on:
Tuesday, January 2, 2024
We need to change our behaviour – and we need to do it fast.
Key Points:
- We need to change our behaviour – and we need to do it fast.
- At the beginning of 2020, the global value of sustainable investment in major financial markets stood at US$35.3 trillion (£27.7 trillion).
- And what should you consider when researching sustainable investments of your own?
Identifying a sustainable investment
- Sustainable investing is an investment approach that considers environmental, social and governance (ESG) criteria in addition to traditional financial factors.
- Sustainable and ethical investing are sometimes used interchangeably.
- Sustainable investing tends to focus more closely on ESG factors overall and how they are being applied within an organisation.
- Don’t forget to investigate the companies on various investment and finance sites, as many have detailed information for listed companies.
Is it profitable?
- You should consider its position in the market and any unique characteristics it has, while also checking whether the company’s leadership own a significant amount of shares.
- If they do, then this demonstrates they believe in their company’s success and “have skin in the game”.
- Check if the company pays out a dividend too, and remember to evaluate its planning for potential risks that could harm its reputation.
Minding your money
- It is paramount for you to clarify your own values and goals before deciding where you invest your money.
- This will help to determine if your interests align with the company’s ESG operations, performance and long-term strategies.
- Or you could avoid any investments in an area that you disagree with – a strategy called “negative screening”.
- You may also wish to consider an independent financial advisor for bespoke professional advice, especially if you have little investing experience.
- Don’t invest money you can’t afford to lose.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.