Investing in sustainable assets
What’s the big shift? Well several global financial institutes, investment firms and high street global banks have done the numbers and seen the future trends beyond 2020.
Companies and businesses around the world are beginning to make the changes to promoting sustainability in their products, taking them beyond Corporate Social Responsibility and practicing sustainability audits.
There is whole set of regulatory, advisory best practices that can be implemented to conform with UN sustainability goals, depending on the type of business and assets available for investment.
What you can do
The Search! Take the first step
Once you start looking, there are many web-based platforms, some providing one stop shop advisory services, others investment platforms. It is impossible to cover them here. But use searches for ethical, sustainable, or ESG investing. Many are country specific but they give valuable insights on what to think about, checklists to help ask questions in the country or region you live in.
USA Website Banks.com covers information on a host of personal finance choices for those in USA but has an interesting section on "A beginners Guide to Ethical Banking".
UK website ethicalconsumer.org started back in the 1989 as an alternative consumer organization magazine, and has taken the format online. Although it covers exclusively the UK it provides information for us all to think about. See their section on Ethical Finance.
Green Bonds can be part of the solution.
What others have done
ESG principles
In delivering the UN sustainablility goals, financial institutions and regulators are increasingly looking at investment funds that comply with ESG principles. These are a recognized way of measuring the sustainability factor of companies in three areas;
E = Environmental – Resource Management, Emissions Reduction, Environmental Accidents, Risk Mitigation
S = Social – Health and Safety, Human Rights, Community Relations, Supply Chain monitoring
G = Governance - Executive Compensation, Shareholder Rights , Accountability of Board Leadership, Vision.
Companies must calculate the level of sustainability compliance and look ahead at its goals for medium to long term projections.
A checklist
Here is an example of some issues included in ESG. Socially conscious investors can use these criteria as a checklist to evaluate companies in which they might want to invest. Start asking some questions before we part with our money.
Environmental – How companies are making an impact on the environment
Climate change impact
Air and water pollution
Waste management and pollution
Energy efficiency
Water scarcity
Natural resource conservation
Animal treatment
Evaluating environmental risk faced by a company related to disposal of hazardous waste, management of toxic emissions, or compliance with government environmental regualtions.
Social – How companies engage with the impact on employees, clients, suppliers and communities.
Human Rights
Consumer privacy
Gender equality
Data security
Health and Safety
Working with suppliers to compy with company values
Investment in local community.
Governance – How companies are governed or managed.
Board structure, ensuring no conflict of interests or Political contributions
Company ownership
Financial reporting
Busness ethics and culture
Executive remuneration
Not engaged in illegal practices.
Similar to all investments, sustainable products markets also carry risk, so investigate thoroughly and do the due diligence and find out who is offering what and how they score on sustainable indicators that matter to you.
Call for change
Where to look?
ESG indicators provide information to a help investors avoid companies that might pose a greater financial risk due to their environmental or other practices. ESG criteria may also help match the companies' values with those of the investor.
Many mutual funds, brokerage firms, and robo-advisors now offer products that use ESG criteria.
Many large Financial Services companies have published annual reports that extensively review their ESG approaches and what is commonly know as the triple bottom-line results, Planet, People and Profit.
Simply look up the ESG investment policies of companies you are interested in or use a search engine type in ESG investment policies, or ESG products.
Ask your global and local banks if they have used the ESG Implementation Guidelines for Banks produced in 2014 by WWF (World Widelife Fund) with Credit Suisse and KPMG in Singapore and the Netherlands.
A number of International Banks and High Street Banks across the globe now offer a range of sustainable funds, often through online fund platforms making it a simpler process for new investors.
Best is to do a search for instance on ESG investing, ESG financial products, or ESG policy of your particular bank…Shop around and investigate reports online….
Find out who is offering what in your part of the world.
