Across the world, sustainability and responsibility are taking on a new importance, with human beings manifesting their interest in backing more equitable, socially productive, sustainable companies and entities. A recent Global Sustainable Investment Alliance report indicates that sustainable investment in five major markets showed a 34% increase in two years – and the recent onslaught of the COVID-19 epidemic is predicted to heighten this tendency. What are the key pillars of responsible finance, and how can you form a part of it as an investor or customer?
Investors interested in lowering the world’s carbon footprint are investing in companies or assets that directly promote sustainability. These include renewable energies, building efficiency, and eco living. Pure green investments are those in which most or all revenue is obtained from green activities. Investors should conduct thorough research to ensure that companies are truly committed to sustainable initiatives. Options green investors can opt for include exchange traded funds, mutual funds, securities and bonds.
In these times, the world has spoken up about its desire for tolerance, justice and peace. If you are a mutual fund investor who adheres to these values, then ensuring your investment portfolio is gun-free is key. If you are an international investor, the Calvert Emerging Markets Equity fund is just one fund that tracks environmental, social and governance companies in emerging markets around the world. If you have already made an investment, using a checker such as WeaponFreeFunds.org will tell you the exposure to firearms brands within your stipulated fund. This way, you can audit your existing holdings and make key changes to your investment strategy. You should also screen all investments against norms established by key organizations such as the OECD, ILO and UNICEF.
Making An Impact
Community investing involves targeted specific communities or individuals you wish to aid, who carry out socially responsible or sustainable practices. Sometimes, investment can be made without an interest in a financial return. Thus, you may decide to provide financial support to charities and social enterprises, offer your professional expertise to an organization or needy community, and encourage others to succeed. In times of COVID-19, companies across the globe have provided meals, donated medical equipment, invested in medical equipment, and provided one-to-one and support care to thousands.
Influencing Action Through Shareholder Power
If you are a major shareholder, you can use this power to influence corporate behavior directly (by communicating your wishes to managers or boards) or by filing proposals and promoting proxy voting that is guided by environmental, social and governance (ESG) criteria. Shareholders can also impact decisions made by other stakeholders, employees, customers and business partners by embracing philanthropic pursuits and by creating a corporate culture that prizes responsible revenue generation.
The new millennium has already seen a heightened interest in responsible investment and finance, but world-shifting changes like COVID-19 have extended their reach. As an investor, there are many ways to continue achieving a good ROI while making a positive difference. Choices to opt for include green, gun-free and community investment, as well as the utilization of shareholder power to promote positive action.