Sustainability is on everyone’s lips, and is more than just a trend. In every industry, companies are expected to act in an environmentally friendly, socially responsible and ethical way. More and more people, and this applies to every generation, want to do good. This also goes for investing.
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Created on 16.10.2019
Want to invest sustainably? What you need to know
Whether they’re shopping, travelling or investing, more and more people in Switzerland are trying to adopt a sustainable lifestyle.
Investing money sustainably - here are the criteria you should bear in mind.
Just because something says it's sustainable,
...that doesn't acutally guarantee sustainable investment.
The ESG criteria provide a reliable standard...
...which is used to assess companies.
E stands for Environmental
This stands for environmental issues such as energy consumption and the use of renewable energy sources,
...as well as the preservation of natural habitats and protection against pollution.
S stands for Social
This is about assuming and maintaining social responsibility,
...for instance safe and fair wokring conditions.
G stands for Governance
When it comes to sustainable governance, it is absolutely crucial...
...that companies can show they have transparent structures that do not provide false incentives.
Different aspects of sustainability
If you would like to know where your money goes, you should take a closer look at the companies you plan to invest in. Sustainable companies, for instances, provide decent working conditions and far pay. This applies to both their own staff and their suppliers all over the world. They support human rights and combat corruption, they naturally care a great deal about the environment and they invest in sustainable projects.
An increasing number of companies are turning to sustainability
From global players such as Apple, Tesla or IKEA, to Swiss companies such as Weleda, Geberit and CSS, the good news is we are seeing an increasing number of companies setting goals related to sustainability and making them public. These are often in the form of sustainability reports. This is where transparency is essential. Make sure the companies you are considering don’t just go into where they have succeeded, but also where they have fallen short. Additionally, companies are issuing more and more “green bonds”. These are bonds used specifically to finance sustainable projects.
ESG criteria
Various different procedures can help you select sustainable investments. ESG criteria are also enjoying increasing popularity. ESG (environment, social and governance) criteria encapsulate environmental, social and governance-related factors such as energy efficiency, human rights and remuneration policy.
What really matters when it comes to sustainable investments
But if you’re looking for the holy grail of sustainable investment, you’re going to be disappointed. No company is 100% sustainable, and compromises are often inevitable. Be sure to consider the following before you decide:
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What do you want to achieve by investing sustainably? (e.g. protect the environment, fight poverty and invest in sustainable, modern energy sources) -
What industries do you categorically want to avoid? (e.g. nuclear energy producers, arms manufacturers) -
What investment options do you have? (e.g. investing directly in bonds or shares, or in specific funds) -
What companies are out of the question? (e.g. companies that violate human rights or conduct animal testing) -
What criteria will you use to select specific items? (e.g. process of elimination, best-in-class, ESG integration)
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The range of sustainable investments is growing
It is possible to do good by investing sustainably without having to curb your prospects of making a return. Whether in shares, funds or bonds: we are seeing more and more investment opportunities, and so anyone looking to invest sustainably is sure to find a solution that suits them.
