1. Introduction
2. What is Sustainable Investing?
3. Why Sustainable Investing?
4. Getting Started with Sustainable Investing
5. Popular Sustainable Investment Options
6. Challenges and Criticisms
7. The Future of Sustainable Investing
8. Conclusion
Did you get a chance to see Apple’s recent news where they announced that Apple Watches have become 100% carbon neutral and by 2030 they aim to make all Apple products carbon neutral? Impressive, how a tech giant like Apple is taking steps to reduce its carbon footprint, isn’t it?
But it's not just Apple that's making an effort. With the growing risks of climate change and natural calamities, people around the world are stepping up and trying to contribute towards a better world.
From choosing sustainable fashion, and supporting local farmers to building homes without harming Mother Nature; a huge number of people coming forward and taking care of our planet and making choices for a healthier future.
And, in this huge movement, a small part is played by sustainable investing too!
If you are someone who wants to grow your investments, generate financial returns, and at the same time contribute towards a better and greener planet, then say “Hi” to the idea of sustainable investing!
We all have values that we grew up with and causes that we are passionate about. Sustainable investments are a way to bring those values and passions into our financial decisions.
They align our investments with what matters most to us, whether that's a cleaner environment, animal well-being, social justice, or ethical business practices.
Many companies offer sustainable investments and as an investor, you can decide what you want to focus on more: making money or making a positive impact.
In simple terms, sustainable investing is when you think about how a company acts regarding environmental, social, and corporate governance (ESG factors).
By investing with these factors in mind, you can align your financial goals with your values and help make the world a better place.
Research suggests that companies that offer sustainable investments perform well in the long run.
Let's break down the (ESG) components:
Difference between sustainable investing, impact investing, and ESG investing:
Why sustainable investing you might ask? We ask why not. If you get to choose between investments that give financial returns and investments that offer financial returns and at the same time make a positive impact on the world, why not choose the latter one?
A 2019 study of 11,000 investment funds done by the Morgan Stanley Institute for Sustainable Investing discovered that funds that focus on doing good for the environment and society performed just like regular funds.
In fact, they were less risky when the market went down and when the market got all crazy, these funds tended to be safer and steadier places to put money.
Here are some additional reasons why sustainable investing is a choice worth considering:
Before you start sustainable investments, you must define the terms of sustainability for yourself.
Because “sustainable” is a very broad term. And, if ethics and values are your only motivation, then you'll need to lay out a specific set of criteria to shape your investment decisions.
Whereas, if you want profit plus sustainability, you will have to diversify your investments and go for smaller-sized companies as they have higher chances for explosive growth and you can get greater value for your investments.
As a starter, you can follow these steps:
By this point, you know how to get started and what to keep in mind while investing sustainably. Now, let's have a look at some popular sustainable options that you can choose from.
But before that, understand that the best option for sustainable investing depends on your individual values, goals, and financial situation.
Like, if you’re passionate about environmental causes, you might prioritize investing in renewable energy companies or green technology. And, if you're deeply concerned about social issues, you may lean towards investments in companies with strong ethical and labor practices.
So choose what aligns best with your objective:
The major challenge that people face when they want to make sustainable investments is insufficient information.
And, this lack of info makes it challenging for people to figure out which investments are genuinely sustainable and align with their values.
While the International Sustainability Standards Board (ISSB) is developing a “comprehensive global baseline” to address this problem, it’s going to be a long path for them too.
Apart from this, there are also challenges like:
The future of sustainable investing is undoubtedly upwards. As global challenges amplify, the role of ESG in investment strategies will only become more prominent.
And when industry giants like Apple, Tesla, Google, and Amazon are embracing sustainability as a core component of their business strategies, others will definitely follow.
Soon, this trend will lead to a more sustainable and responsible investment landscape, creating opportunities for you to make a positive impact while growing your financial wealth.
If you are new to investing, you are in a great position to make a difference. By investing your money in things that help the planet and society, you can encourage companies to do better, inspire new ideas, and help create a nicer world.
In the end, we would just like to emphasize the fact that the sustainable finance market size was valued at USD 4.2 trillion in 2022 and is projected to register a CAGR of 22.4% between 2023 and 2032, driven by increasing impact investing efforts.
The consciousness of the planet Earth is finally shifting towards a better change. And, we, at RuDo believe that that every dirham is an opportunity for change.
With traditional investments, you change and redefine your future but with sustainable investments, you redefine the future of the world.
So use your money for things that matter to you and start a journey where your investments have a strong meaning and goal.
To learn more about ESG investments, click here (RuDo’s webpage about ESG investments)
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