More investors are starting to practice ESG investing. In 2021, they allocated over $69 billion to sustainable and ethical investments. This figure is growing steadily by the year.
The sudden interest in ESG investing is encouraging, as global concerns about climate change escalate. As a result, ethical investing is becoming more important than ever. Fortunately, the practice is easier than ever.
New Prime Minister Rishi Sunak recently performed his first U-turn as PM, having agreed to attend COP27 in Egypt despite suggesting that he wouldn’t make the trip just days before.
Like the preceding COP26 event in Glasgow last year, this will create new sustainability commitments for businesses to follow as part of the wider Net Zero agenda, while boosting renewable energy markets and investment across the globe. You can still maximize profits as an ethical investor, since many eco-friendly and socially conscious companies have found their social missions benefit their bottom line.
In this post, we’ll take a close look at so-called “ethical investments”, while asking how you can effectively target viable stocks and assets.
Getting Started by Researching Businesses
You’ll need to start by researching and identifying sustainable businesses and investment options, prioritizing those that have clear commitments and environmental policies and contribute to sustainability efforts in local communities across the globe.
You can source information from each business’s individual websites (particularly their ‘About Us’ pages) and through external Internet research, which may reveal relevant projects that they’ve participated in or environmental awards that they may have won.
At this stage, we’d also recommend take an introspective look inside yourself, in order to confirm your own values, precisely what you care about and how you want to impact positively on the wider world.
For example, you could decide to target clean water or recycling stocks, or focus on indexes that features brands with an emphasis on social equality.
Purpose Over Profits – The Key Consideration with Ethical Investments
At this stage, it’s important to consider one of the oldest tropes pertaining to ethical investments, which is that they don’t deliver the same level of return or profitability as less sustainable alternatives.
While there remains some truth to this in some markets, it’s a trend that’s continuing to change markedly with every passing year. Just look at renewable solar stocks through 2022, for example, which despite declining by around 11% in the year to date, have performed far better than the S&P 500 (which has depreciated by 19% on average) during the same period.
This means that are some ethical and sustainable stocks that can deliver a viable profit, so compare the full range of attractive shares on your shortlist before deciding where to invest your hard-earned cash.
How to Invest in Sustainable Markets
There are multiple ways in which you can invest in your chosen sustainable stocks and markets, from the procurement of corporeal shares and equities to the use of spread betting to speculate on price movements over time.
Another potential option is to target so-called “ESG” funds, with the term “ESG” referring to environmental, social and governance sectors.
The benefit of this is that it enables you to invest into a broader selection and sector of sustainable businesses, immediately diversifying your capital interests and minimising exposure to risk in the real-time marketplace.
This is arguably the ideal way in which to start investing in sustainable stocks, while it also helps you to identify and learn about ethical businesses as you continue to build your knowledge base.