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https://www.youtube.com/watch?v=Fk_NhvhXSqI
Social and environmental change is happening faster than ever. Global warming and the technology revolution are reshaping our planet. In this fast changing world, there are a growing number of investors who want to understand how social and environmental change is affecting their investments and how the way they invest affects the society and environment. Sustainable investing involves considering more than just traditional financial analysis though. Sustainable investing, also known as ESG investing or socially responsible investing, is the process of incorporating environmental, social and governance factors into investment decisions (EY Global, 2020). More specifically, sustainable investing is a means of investing in which an investor strongly considers environmental, social, and governance (ESG) factors before contributing resources and money to venture or a particular company (VentureXchange, 2022). Individuals who invest sustainably choose to invest in organizations, companies and funds with the purpose of generating measurable environmental and social impact alongside a financial return (Berry, T.C. and Junkus, J.C.,2013).
The idea is that those actively preparing themselves for future opportunities and risks by recognizing their environmental and social impact will have better long-term prospects than those that don’t. Their competence to generate sustainable financial returns should therefore be superior to those that take a shorter term view (Schroders, 2020). Also, the issue of sustainable investing has multiple aspects, all of which need to be considered if sustainability is to be guaranteed. Impacts are spread across different sectors, from climate change and renewable energy, to safety, health and community development. In other words, sustainable investing ensures that firms aren’t judged solely on short-term financial gains but on a broader picture of what and how they contribute to society at large (Harvard Business School, 2022). Also, at the start of 2020, global sustainable investment reached USD 35.3 trillion in the five major markets including Europe, United States, Canada, Australasia and Japan, a 15% increase in the past two years (2018-2020) and 55% increase in the past four years (2016-2020) (Global Sustainable Investment Alliance (GSIA), 2019). In summary, sustainable investing is about generating returns that are sustainable into the future.
