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A Basic Guide to Investing Sustainably

Basic guide to sustainable investing

Why Impact Investing and ESG?

Impact investing and ESG have become a huge interest over the years. Most investors are willing to outweigh cost than potential gain in order to build a more sustainable portfolio. Sustainable investing has turned into a rapidly growing industry due to the increase in the awareness of environmental issues and impacts of climate change.

The Guardian author, Janet Ranganathan, cites the World Economic Forum survey that identifies sustainability issues such as water, extreme weather and climate change as one of the primary risks in global businesses that result in the vulnerability of various sectors, more importantly in food and energy. Investors have prioritized social and environmental responsibility to a level that has transformed the way companies create their model strategy. Today:

  1. Companies who harm the environment now push towards sustainable operations
  2. Sustainably-focused companies have gained competitive advantage; and
  3. Sustainable investments open opportunities to create positive social impact and generate financial return.

See the difference between Impact Investing and ESG here

Sustainable Investments 

Elliot Smith from CNBC reports that “whether it’s in equities, government bonds, ETFs (exchange-traded funds) or hedge funds, investors around the world are demanding socially and environmentally conscious options.”

1. Equities

Green stocks are becoming more competitive due to the growth of climate awareness, advancing technologies, and low cost of cleantech.

2. Bonds

Projects that are funded by green bonds are focused on energy efficiency, pollution reduction, transportation and innovative green technologies.

3. ETFs

Smith defines ETFs as “an investment fund traded on stock exchanges, much in the same way as stocks”, and adds that 74% of global investors are increasingly placing focus on allocating ESG ETF over the next years. 

4. Hedge Fund

Hedge Fund managers are prioritizing ESG to keep up with investor demands, ensuring to follow ESG criteria that is centered in corporate values and sustainable production.

Call to Action

To begin investing sustainably, it is important to create extensive research to avoid “greenwashing” and establish the right opportunities for you. This is where companies like Transformation LLC come in to help investors by combining strategic advisory, the right connections, and new green technologies with project development that are centered in planet preservation and sustainable investments.  

April 22, 2020

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