Sustainable Investments in Action: What Impact Could Your Capital Create?

What good can sustainable investing do? In this article, Founding Financial Adviser Debbie Packer discusses the impact of ESG investments and examples of the types of businesses that are supported across many sustainable investment funds. 

From tackling issues in areas such as climate change, social inequality and corporate governance, modern-day investors are more aware than ever of the impact their capital can have on the world around us.

This has therefore challenged the traditional investment landscape, where return on investment was once the key focal point, resulting in the rise of sustainable investments, as many investors now wish for their money to ‘do good’ by aligning their own ethical stance with their investment decisions. That being said, it is important to note that by selecting a sustainable portfolio as part of your investment planning, you are not forfeiting returns but, instead, providing increased diversification that should ultimately lead to a better overall return.

There is now far more regulation within this sector, and global companies are soon to be required to provide a carbon emissions profile and updates on environmental and social risks within their company reporting.

Sustainable investments, also known as Environmental, Social, and Governance (ESG) investments, are evaluated by investment houses, using measures to determine their impact to allow investors to support businesses that are committed to ethical practices, sustainability, diversity, and positive social outcomes.

It is also fair to highlight that there is a lot more focus on Human Rights within brand supply chains. In the UK, even secondary school children are being taught about the issues faced by some well-known organisations who have perhaps overlooked this when seeking maximum profits and are now being held to account.

But, what impact could your money really make in the world around us by choosing to invest in sustainable solutions? Examples of the types of businesses that fall into the Sustainable Investing category could include:

Sustainable investing supports renewable energy companies that generate clean energy from sources like solar, wind, and hydropower, reducing carbon emissions and combating climate change.

This focuses on funding projects/organisations that drive positive social outcomes, such as education, healthcare, and affordable housing, through initiatives like micro-finance, social enterprises, and community development.

Supporting fair trade cooperatives, organic producers, and agroecology projects that promote soil health, conserve water, and support smallholder farmers.

Supporting solutions for environmental challenges, such as waste reduction, energy efficiency, and resource conservation, through sustainable products and practices.

Businesses that promote ethical supply chain practices, such as responsible sourcing, fair labour standards, and transparency in production processes, can also apply here.

If you have not yet considered sustainable investments for your own portfolio, it will become hard to ignore their importance in the future. Global GDP is already 40% covered by sustainable disclosure, meaning that almost half of the global economy has a need to report on their ESG credentials.

Furthermore, the Green Economy, as a sector, represents 10% of the global economy and with increasing controls and disclosure requirements, this is certainly a number we see continue to rise.

Therefore, by investing in companies and projects that promote sustainability, social responsibility, and ethical governance, investors not only have an opportunity to grow wealth but also to contribute to a more sustainable and equitable world for future generations.

To discuss your investment preferences and opportunities, please do not hesitate to get in touch with one of our Independent Financial Advisers on 0117 450 1300.