Sustainable Investments: An Introduction

Sustainable Investments: An Introduction

In modern times, the topic of sustainability is becoming more and more important. It is no longer just a matter of using resources carefully in everyday life and leaving the smallest possible ecological footprint. It's also about how we invest our money. Sustainable investments are therefore a future topic that is increasingly coming into focus.

What is a sustainable investment?

A sustainable investment is an investment that takes social and ecological factors into account in addition to financial ones. It's about more than just a good return. The aim is to use the invested capital to have a positive impact on the environment, climate and society. 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: economics, ecology and social issues. Investing your money sustainably means investing in companies that do justice to these three aspects.

1. Ökonomie: Natürlich ist eine gute Rendite wichtig. Nachhaltige Geldanlagen sollen sich finanziell lohnen. Doch wer nachhaltig anlegt, berücksichtigt auch, wie das Investment erwirtschaftet wird.
2. Ökologie: Investitionen in nachhaltige Unternehmen sollen dazu beitragen, Umweltauswirkungen zu reduzieren. Das kann zum Beispiel bedeuten, dass in Unternehmen investiert wird, die erneuerbare Energien nutzen oder Produktionstechniken verwenden, die wenig CO2-Ausstoß verursachen.
3. Soziales: Bei sozialen Kriterien geht es beispielsweise um faire Arbeitsbedingungen, einen gerechten Umgang mit Mitarbeitern und den Einsatz gegen Diskriminierung. Ein nachhaltiges Unternehmen handelt sozial verantwortlich und sorgt für gute Arbeitsbedingungen.

Sustainable investment strategies

In order to invest sustainably, investors have various investment strategies available. Here are some of the most common methods:

Elimination process

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

Best-in-class approach

Using the best-in-class approach, investors select companies that are leaders in their industry in terms of sustainability criteria. Instead of excluding certain industries or countries, they try to find the best companies in each industry.

Impact investing

Impact investing is about achieving a positive social or environmental impact. What counts is the effect of an investment and its contribution to solving social and ecological challenges.

Advantages of sustainable investments

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

Risk reduction

Companies that follow sustainable practices are often less risky than companies that don't. They tend to be better prepared for future challenges and less vulnerable to scandals that could damage their reputation and stock market price.

Long-term performance

Sustainable investments can offer better performance in the long term. Many studies have shown that companies that perform well on environmental, social and governance issues can also perform well financially.

Contribution to sustainability

With sustainable investments, investors can help make the world a better place. They support companies that pursue sustainable practices, thereby helping to solve important social and environmental challenges.

Conclusion

Sustainable investments are more than just a trend. They are an important strategy for investing money while doing something good for society and the environment. Sustainable investing requires a certain amount of research and care. But for those willing to get involved, sustainable investments can be a worthwhile investment both financially and in terms of their impact.