Believe it or not, investing can evolve into strategies that encompass more than just monetary risks and rewards. While these things will always remain present, new skills and mindsets are finding different ways to invest – while making a positive impact on the world.
This new trend is known as sustainable investing — and it has made its way into investment management.
What is Sustainable Investing?
Sustainable investing is investing with a greater purpose. It involves combining traditional investment practices with environmental, social, and governance (ESG) issues.
Rather than just maintaining focus on a firm’s ability to obtain financial gains, greater attention is placed on how their investment decisions are making an impact on society as a whole. In other words, they aren’t just looking to boost their own portfolio, but rather consider the influence they are having on the world around them.
Consider it an intentional investment to gain a reward in every sense of the word.
Sustainable Investing Strategies
There are different sustainable investment strategies that are being used. Two that stand out are activist investing and impact investing.
- Activist investment. This refers to investing in companies with the intent of gaining some control over how they run. Decisions for these investments are made based on causes the investor feels passionate about, such as environmental concerns like global warming.
- Impact investment. This focuses on solving problems within communities and businesses that have a clear agenda to meet positive societal or environmental goals. This has a focus on investing to make a difference for the greater good, big and small.
As sustainable investment continues to evolve, more and more strategies will appear.
Sustainable Investing Trends
Everyone may have their own thoughts and opinions on how best to handle their investments, but there are a few different ways emerging in investment management that involve sustainable investing. Let’s take a look at these trends.
Investors are willing to address issues with sustainability. In industries that are making a push toward better eco-friendly practices and adopting long-term sustainability, investors are coming forward with the willingness to drive capital toward all that comes with the future these changes will bring.
Investors want to see performance results. Not only are they throwing capital toward these positive changes, but investors are demanding to see the results of their involvement. They are giving the companies what they need to make a change for the good and need to see that their efforts are having a positive impact.
Not only is this good investment sense, but it forces the company to make the change in order to get funding in the future. It can also reflect whether or not a real difference is being made in society or environmentally.
There is an influx of consultants with a sustainability focus. As the demand is increasing for sustainability investing, more and more consultants are expanding their focus. They are finding new and effective ways for clients to achieve their financial goals while maintaining a positive impact on the environment, society, and political realm.
There are plenty of opportunities out there – it is up to investment managers to lead the way.
Is Sustainable Investing the Future of Investment Management?
All investors have their own ideas for their financial goals – and how to achieve them. Sustainable investing may not be in everyone’s future, but one thing is for sure: it is not going anywhere.
As long as the results are proven, the investments are sure to continue flowing. Sustainable investing will be more than just a passing trend.
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