Sustainable Investing

There is a paradigm shift taking place right now as you read this. It is happening in one of the most unlikely of neighbourhoods. One which has stood against time for centuries, one which has gone through higher highs and devastating lows. Can’t think of anything like that? Wall’s street of the business world is that unlikely neighbourhood.

Investing has taken a turn for good and now is the time to hop trains and step on the unsullied platform of sustainable investing. What began as a niche desire by investors to put their money where their heart is, has matured into a growing agreement among executives and spreading like wildfire among the common.

What is Sustainable investing, you ask. Sustainable investing, also known as socially responsible investing, is the process of incorporating environmental, social and governance (ESG) factors into investment decisions.

Individuals who invest sustainably choose to invest in companies, organizations and funds with the purpose of generating measurable social and environmental impact alongside a financial return. Impacts are spread across various sectors, from renewable energy and climate change to health, safety and community development. Sustainable investing enables individuals to select investments based on values and personal priorities. Initially, sustainable investing negatively screened companies and industries, which often led investors to sacrifice returns for value-aligned investment choices. In recent years, however, investors have used positive screening of ESG risk factors to create a modern “best-in-class” investment approach that generates performance that is in line with and often exceeds market benchmarks.

This shift toward market outperformance in several sustainable investing products has contributed to the increase in demand for these products as fiduciaries look to serve their clients by not only generating returns but also assessing impact.

If u find all of this sceptical, here are some facts to soothe those doubts. According to Morningstar, the first half of 2020 saw a record $20.9 billion net flow into sustainable funds, almost as much as all of 2019, In the volatile first half of 2020, “an impressive 72% of sustainable equity funds rank in the top halves of their Morningstar Categories and all 26 ESG (environmental, social, and governance) index funds have outperformed their conventional index-fund counterparts.

Sustainable investing opportunities enables not only the capture of financial returns but also to realize intrinsic returns not replicated elsewhere. It’s the best of both worlds and who doesn’t like a buy one get one free offer.