Sustainable investment has become an indispensable part of the investment landscape. Investors are increasingly concerned about environmental, social and corporate governance(ESG) factors when allocating capital. This article will summarize promising sustainable investing methods that deliver both financial returns and positive impact, with a focus on sustainable investment solutions. From negatively screening out unsustainable companies, to positively tilting portfolios towards sustainable leaders, various solutions enable investors to align investments with values and drive meaningful change.
Sustainable investment funds allow accessing diversified sustainable assets
Many investors opt to invest through sustainable mutual funds or ETFs rather than picking individual stocks. These funds screen for companies with high ESG ratings and avoid controversial sectors like fossil fuels. Notable sustainable funds include iShares ESG Aware MSCI USA ETF (ESGU), Nuveen ESG Large-Cap Growth ETF (NULG) and Parnassus Endeavor Fund (PARWX). By holding diversified sustainable assets, these funds provide convenient one-stop access to the sustainable investment universe.
Shareholder advocacy compels companies towards sustainability
Active shareholders can steer companies towards greater sustainability through proxy voting, shareholder resolutions and direct engagement. Large sustainable asset managers like Calvert and Trillium often file shareholder proposals requesting better climate disclosures or diversity policies. By leveraging their ownership stakes, sustainable investors prompt corporations to improve ESG practices.
Impact investing channels capital to social enterprises
Impact investing specifically targets enterprises delivering social or environmental good along with financial returns. Impact investors may fund solar power startups expanding energy access, or microlenders providing loans to unbanked communities. Notable impact funds include Omidyar Network, Acumen and Leapfrog Investments. By financing and supporting early-stage social enterprises, impact investing fosters innovation for sustainability.
Green bonds enable raising capital for climate solutions
Green bonds allow corporations and governments to raise funds for climate-friendly projects like renewable energy, green buildings and clean transportation. The global green bond market exceeded $1 trillion in 2021. Major green bond issuers include the European Investment Bank, Apple, Toyota and the City of Houston. Green bonds attract sustainability-focused investors to finance critical climate infrastructure.
In summary, sustainable investment solutions like ESG integration funds, shareholder advocacy, impact investing and green bonds empower investors to align capital with sustainability values and drive positive impact. The growth of sustainable investing signals the financial sector’s growing role in tackling global challenges and building a just, sustainable future.