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Created on 19.02.2018 | Updated on 04.02.2021

Investing sustainably: do good while securing potential returns with sustainable investments

Sustainable investors don’t just focus on returns, but adopt a far-sighted approach to their investment assets. You can invest your money based on your own ethical and social values and beliefs, and promote sustainable development.

More and more investors not only want to maximize possible returns by investing in stocks, funds and other investment instruments, they also want to be able to stand by their investments and share or even influence the values and views of companies and contribute to solving global challenges.

Nowadays, everybody is talking about the ESG criteria for sustainable investments. Find out more in our article “Want to invest sustainably? What you need to know“, for more information about these criteria and an introduction to sustainable investments. In our article “Green and fair? How you can invest money sustainably“ tells you more about the process for choosing sustainable investments.

Contrary to the opinion of many, you can expect similar returns from sustainable investments when compared with conventional investments. The myth that sustainable investments generally have negative returns has been refuted by scientific studies. On the contrary, companies need to have a strong focus on environmental or social risks and focus heavily on ESG measures, leading to improved risk awareness within the company and simultaneously reducing the risk of costly negative events such as legal actions. Due to these factors, companies with higher ESG scores tend to have higher profits over the long term than companies that are less well-versed in risk management. Nevertheless, like all financial investments, green investments are not free of risk and may have little or no effect on returns. The basic requirement for the most successful green investment possible remains diversification of your portfolio. Find out more in the article “Diversification – how it works“.

An overview of sustainable investment opportunities:

  • Sustainable companies already fulfil key criteria in the conservation of natural resources. The prospects for a sustainable business can be determined for companies, for instance, based on water consumption or conservation of biodiversity – which can, of course, also be advantageous for investors.
  • Sustainable companies must tackle several interrelated issues to address the challenges of our times in order to meet the relevant ESG criteria; climate change, scarcity of resources, increased energy requirements and growing demand on industries such as the health sector are just a few examples. These and other topics that deal with changes related to sustainability open up interesting and promising opportunities for investors.
  • Companies that are more sustainable use more environmentally friendly technologies such as renewable energies.This helps them to avoid the risk of environmental disaster and the resultant costs.
  • Sustainable investments have grown significantly in recent years and are expected to continue to grow strongly. This strong growth means that an increasing number of market participants are grappling with the topic of sustainability – this in turn could benefit investors, as an increasing number of market participants deal with sustainability and take it into account in their investment considerations.
  • Sustainable companies also value corporate governance, in addition to the environment and social issues. Companies want to appear as attractive and responsible employers and to be perceived in this way by both internal and external parties.

To learn more about investments that are used exclusively for the benefit of certain social or ecological projects, you can also read the article “What is impact investing?“.

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