How to Invest in Sustainability.｜May 25th, 2021.
What is sustainable investing?
Most businesses now list diversity, equality, and inclusivity among their value propositions. While it took a long time to reach this point, there is another value that is rapidly defining modern business: sustainability.
Across industries from energy to manufacturing, transportation, and distribution, companies are looking for ways to live up to their environmental and social responsibility. This trend is opening new doors for people considering how to invest in sustainability.
Sustainable investing (sometimes called responsible or ethical investing) is an emerging opportunity for investors to shape how the world changes and the companies that drive this change. We can’t all fly around the globe in a solar-powered airplane, start a global climate movement or run the world’s most successful electric vehicle company.
But we can still contribute and feel good by joining the sustainable investing revolution. The reduce-reuse-recycle mantra of the 1980s is expanding into the sustainable investment platforms of today.
The sustainability investor
Sustainable investing can take many forms. Before looking at the details, though, you might be wondering whether it’s right for you. All financial investments carry some amount of risk and opportunity cost. So, all your investments should be approached from an informed perspective.
That said, the world will not become a sustainable place overnight. Even the plans being rolled out by major countries mainly have a 10 to 40-year horizon to reach fruition. The sustainability investor is, therefore, more likely someone looking at long-term returns than someone in their late retirement.
The range of problems addressed by sustainability is far too large for any one person, sector, or government to solve. The sustainability investor is someone who cares about one or a few causes. If TV reports from places like Yemen, Myanmar, and Syria disturb you, companies that make or sell arms will be off your list. If you oppose the destruction of the natural habitat of Indonesian orangutans, you should invest in companies that don’t use palm oil in their products. And, if you want to help put a stop to racial injustice, investing in minority-owned businesses will appeal to you.
4 Reasons To Take Another Look At Sustainable Investing In 2020
Sustainability sectors
Some sectors are more open to sustainable investing than others. Energy is a more obvious example. Fossil fuels still supply the vast majority of global energy consumption. But, even the giant energy companies realize that this supply is finite, and it is fast becoming less popular with consumers.
For the last few years, an increase in sustainable investing in the energy sector has forced some of the largest players to change their practices. Also, renewable “green” energy is beginning to compete on a cost basis.
Transportation is a related sector now ripe for someone looking to invest in sustainability. The global electric vehicle market is projected to swell at a compound annual growth rate of over 23% in the next six years. While that demand will come mostly from consumers, governments are also looking to build or improve infrastructure, which will also boost public transport demand.
Water and food demand will increase in step with global population growth. Already becoming scarce in some parts of the world, these resources will soon have to be produced in more sustainable ways. Companies are looking at ways to achieve this, and those successful will represent a solid sustainable investment opportunity.
Carbon capture aims to remove carbon dioxide gas from the atmosphere. This is currently the most long-term way to invest in sustainability. It is also among the most exciting and impactful approaches being considered. Although it is, as-yet, unproven, a competition to develop the technology will open on April 22, 2021 (Earth Day) with total prize money of $ 100 million. The person behind this initiative is entrepreneur Elon Musk.
Supporting all these sustainability efforts are a host of ancillary industries that are also ripe for sustainable investing. Businesses that manufacture wind turbines, solar panels, efficient batteries, or industrial-scale water filtration systems will all benefit as their growth is accelerated by sustainability-conscious investors.
Another type of company where you can invest in sustainability is one that lies at the intersection of sustainable initiatives. Miniwiz is the leading supplier of sustainability innovations to household-name businesses and governments that are working toward a better world. For the past 16 years, we have been lighting up headlines around the world with our projects.
Take trash for example. We believe that fish, not tons of single-use trash, belong in the ocean. So we built a whole house from trash instead. We also furnished and decorated it with trash.
And we’re just getting started. We’re especially excited about our upcoming launch of virus-resistant and antibacterial wall panels.
Sustainable investment methods
In practical terms, investing in sustainability is no different from traditional investing. If a company you want to invest in is publicly traded, you can buy and sell its stocks just like you would any other public company. Or, you can have a dedicated investment firm manage a stock portfolio on your behalf. This may allow you to vote directly on environmental, social, and governance (ESG) decisions made by these companies.
Increasingly popular are sustainably-focused investment funds. These comprise a portfolio of assets managed by a professional on behalf of many clients.
These funds also work much like traditional funds, but with one difference: their prospectuses usually include specific information about the kind of sustainability they target. They may even give the actual sustainability metrics on which companies are evaluated for inclusion.
Many investment firms now offer such funds. The fund managers often play a key role in influencing company decisions regarding sustainability.
8 sustainable investing terms to know by Fidelity International
Conclusions
With Earth Day just around the corner, many people are contemplating how they can help the planet and the people who live on it. A decade ago, investing in sustainability was a niche opportunity. Today, it has entered the mainstream, and for young men and women ready to invest, it represents one of the best ways to safeguard the future — yours and everyone’s. Take a look at our solutions, from zero waste building materials to fully-upcycled consumer goods. They will help you decide how to invest in sustainability.