The concept of sustainability leads us, as a rule, to be able to satisfy human needs, without compromising the environment and the lives of future generations. Sustainable development is a determining topic in today’s society, however have you ever wondered about the concept of sustainable investment?
A sustainable investment consists of investment practices and strategies that take into account environmental and social factors to generate long-term returns. These financial products are analyzed to ensure that the company’s sustainability practices are complied with. It is common to think of this investment as “green investment”, not being equal to the rest, which is not at all true. The difference lies in the focus beyond the financial return (encouraging companies for socio-environmental responsibility).
This type of investment is related to the ESG (Environmental, Social and Governance), an indicator that regulates good business and investment practices that include sustainability. Some aspects considered by ESG are environmental and social impacts, waste management and carbon emissions. The adoption of this indicator represents a change in the company-investor relationship, mainly by the company, because adopting sustainable practices is included in the financial strategy.
There are several reasons that demonstrate that the investment in these funds is worthwhile. The Global Sustainable Investment Alliance reveals that, in the period from 2016 to 2018, sustainable investment had a considerable growth in most regions of the world. It represented 48% of total assets in Europe and over 50% in Canada, Australia and New Zealand. In addition to the growing awareness of the financial value associated with sustainable funds, investors’ motivations also changed as a result of the context. For example, helping to implement the ONU’s sustainable development goals, combating climate change and the desire to positively impact society are now catalysts for investment.
And Portugal is no exception, interest in the topic is growing, however not all organizations have incorporated such concerns into the funds. It is a gradient for the coming years, with positive examples being Caixa Investimento Socialmente Responsável, o Santander Sustentável Fundo Misto e CAESG Sustentável 2025.
Summing up, it is important to ensure that the sustainability label is not limited to a marketing strategy! Let us remember, for example, that some energy producing companies have these funds and their ecological footprint does not diminish; nor does it enhance their relationship with local communities.
