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The Rise of Sustainable Investments

In recent years, sustainable investments have been on the rise and many investors are interested in aligning their money with a higher purpose beyond profits.
the rise of sustainable investments | WalterSchindler.com

The United Nations mandate that “in order to prevent warming past 1.5 degrees Celsius and extreme climate, we will need to reach net-zero emissions by 2050”.

This goal has led to many new policy changes and left its mark on the business world. 

However, many companies and investors still struggle with the notion behind sustainability and the implications it provides for daily operations.

In order to ensure a long-term solution, it is vital to provide a path towards sustainability that is profitable. Sustainable investments have proved themselves to create synergy between generating profit and benefiting the environment.

Sustainable investments combine environmental, social and governance (ESG) insights with traditional investment processes to provide for profitable long-term investment outcomes.

In the recent years sustainable investments have been on the rise and many investors are interested in aligning their money with a higher purpose beyond profits.

Global Growth in Sustainable Investments (USD $ Trillion)

Source: Global Sustainable Investment Alliance

Sustainable investing is about finding new and better ways of doing business, and inspiring others to help create the change towards the green future we want to build. 

Before choosing an investment we advise clients to familiarize themselves with the terminology and get an overview of where they stand on green investments. 

Spectrum of Impact Investing

The spectrum of sustainable impact investing is wide, ranging from traditional investing to philanthropy and everywhere in between. However, realize that activities and returns change depending on the type of investment.

For example, traditional investing seeks financial returns regardless of ESG factors. Philanthropy, on the other hand, is the exact opposite; financial returns are disregarded in favor of social and environmental solutions. Sustainable impact investing is in the middle of the range, where both sustainability factors and financial returns drive investment selections.

Why You Should Consider Sustainable investments

Sustainable investments allow you to generate profit while also benefiting the environment and  provide you with the opportunity to align your investments with your beliefs. In addition, companies that align their strategy with their morals signal “operational efficiency and lower cost, reduced environmental liability, opportunities for low-carbon revenue sources, effective management of human capital, reduced risk from reputational damage or weak financial controls, and well-managed operations and costs in the face of regulatory charges” according to Fidelity Active Investors.

How to measure an investment’s impact?

Several financial institutions are creating scores to help investors evaluate the “greenness” of their investments. There is a wide range of tools and guidelines out there on sustainability standards, but none currently have a widely accepted standard. 

In our article “How to measure Sustainable Investments” Marissa Wiseman introduces a few of the different scores and standards that are available. The Sustainability Accounting Standards Board Foundation, The Green Evaluation, The Risk Atlas as well as Morgan Stanley’s Impact Quotient are widely used in practice to assess the impact of an investment.

We still have a long way ahead of us on the journey towards sustainability.

Transformation is specialized in impact investments in the markets of energy, water, agriculture and healthcare. By integrating the latest technologies with sustainable innovations, we help clients achieve lasting profit, while maximizing system efficiency and impact. Contact us to talk about your project and investment interests.

November 11, 2020

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