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What is Green Investing?
You may be surprised to know that green investing is not like a regular investment. Instead, green investing focuses on supporting a business’s favorable activities to positively impact the natural environment by preserving natural resources and reducing pollution. In addition, green investments group with socially responsible investing (SRI) or environmental, social, and governance (ESG) criteria. Furthermore, there are multiple ways that green technologies can return high profits for investors and open up significant investment opportunities, including green equities, green funds, and green bonds. Moreover, green energy investments are a top concern regarding climate change. These green power investments may consist of water stocks, wind power, green transportation, water reduction, organics, solar energy, and aquaculture. In addition, investing in green energy will open the doors for investors to use their capital to influence society and hope for a more sustainable future positively.
3 Pillars of Corporate Investment Sustainability
There are three pillars of sustainability considering green corporate investments; environmental, social, and economic. The environmental pillar of corporate investment is the most addressed because it deals with companies reducing their carbon footprints and water usage while increasing their ecological efforts towards the environment. Companies that practiced this found a positive financial impact while having a beneficial effect on the planet. Furthermore, the social pillar deals with the social license for the company to run its operations within the community, with a regular supply chain filled without the work environment questioned as unfair towards labor laws and employees treated fairly. Moreover, the economic pillar of sustainability considers the company’s stability other than just profit but activities focusing on compliance, risk management, and regulated governance.
The Impact of Sustainability
The most significant deciding factor for businesses is whether sustainability profits them. Sustainability incorporates strategies into business movements like community engagement and strategic recruitment. Furthermore, sustainability provides an investment opportunity for companies to organize diverse efforts for public goodwill. Therefore, sustainability investments are considered investments that have a gradual yet severe impact on a business’s operations while requiring accountability through the supply chain from the primary level down to the retailers. With applied research, a study found that sustainable resources outperformed most traditional stock funds.
Factors of Sustainable Investments
There are quite a few fundamental factors of sustainable investments that encompass much more than the uplift of social unrest and climate change. Furthermore, there is a growing recognition of sustainability investments among the industry that apply ESG factors are considered economic factors that will affect the industry long-term, which is why it is vital that ESG factors are involved as well as critical elements of sustainable investing including the following:
- It is a relied upon additive for asset management with valuable foundational concepts.
- It considers a diverse group of stakeholders, which is harmonious with how sustainable companies are developed.
- It applies research and develops a depth insight into the value created using ESG concerns.