Sustainable investments: an introduction

Sustainable investments: an introduction

In modern times, the topic of sustainability is becoming increasingly important. It is no longer just about dealing with resources in everyday life and leaving the smallest possible ecological footprint. It's also about how we put our money. Sustainable investments are therefore a future topic that is becoming increasingly important.

What is a sustainable investment?

Sustainable investment sees itself as an investment that, in addition to financial social and ecological factors, takes into account. It is about more than just a good return. The aim is to achieve positive effects on the environment, climate and society with the capital invested. But what exactly does that mean?

The three pillars of sustainability

Sustainability is made up of three pillars that also play a role in sustainable investments: economy, ecology and social issues. If you invest your money sustainably, it means investing in companies that meet these three aspects.

1. economy: of course a good return is important. Sustainable investments should be financially worthwhile. But if you put on sustainable, you also take into account how the investment is generated.
2. ecology: Investments in sustainable companies should help reduce environmental impacts. This can mean, for example, that companies are investing that use renewable energies or use production techniques that cause little CO2 emissions.
3. Social Affairs: For social criteria, for example, it is about fair working conditions, just dealing with employees and the use of discrimination. A sustainable company is socially responsible and ensures good working conditions.

sustainable investment strategies


Various investment strategies are available to invest sustainably. Here are some of the most common methods:

exclusion procedure


During the exclusion process, also called negative screening, certain industries, business practices or countries are excluded from the investment. For example, investors do not invest in companies that produce weapons, pursue controversial business practices or operate in countries that are criticized for human rights violations.

best-in-class approach


With the best-in-class approach, investors select companies that are the leading in their industry with regard to sustainability criteria. Instead of excluding certain industries or countries, try to find the best companies in every industry.

Impact investing


Impact Investing is about achieving a positive social or ecological effect. What matters is the effect of an investment and your contribution to solving social and ecological challenges.

advantages of sustainable investments


But why should you invest in sustainable investments as an investor? Here are some of the advantages:

risk reduction


Companies that pursue sustainable practices are often less risky than companies that don't. They tend to be better prepared for future challenges and less susceptible to scandals that could damage their reputation and stock exchange course.

long -term performance


Sustainable investments can offer better performance in the long run. Many studies have shown that companies that perform well with regard to the environment, social affairs and corporate management can also do well financially.

Contribution to sustainability


With sustainable investments, investors can help to make the world a bit better. They support companies that pursue sustainable practices and thus contribute to solving important social and ecological challenges.

FAZIT


Sustainable investments are more than just a trend. They are an important strategy to invest money and at the same time do something good for society and the environment. Sustainable investment requires a certain level of research and care. But for those who are willing to contribute, sustainable investments can be a worthwhile investment both financially and in terms of their effect.