Gregory Voetsch
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Sustainable investing is growing in popularity. However, many people are still not willing to take the plunge and begin building sustainable portfolios. That is mainly because many myths and misconceptions are blinding them.
This article discusses some of the most common sustainable investing myths. We debunk these myths and provide you with the information you need to make an informed choice. With this information, you can see the opportunities available in sustainable investing and how you can take advantage of them to build your investment portfolio while making a positive impact on the environment and society.
Sustainable Investing Myths – Debunking Myths
Are you interested in sustainable investing? Many people get into sustainable investing to make a positive contribution to the planet. While this form of investing is becoming more popular, many people are yet to take up the mantle for the environment and society. That is because they still believe the myths surrounding sustainable investing.
Sustainable Investing Is All About Choosing Companies That Have Good ESG | Gregory Voetsch
In this article, we bust some of the most common sustainable investing myths to help you better understand what it involves and what your options are.
1. Sustainable investing is solely about protecting the environment.
The term sustainable investing is applied to describe a school of thought in making investments where investors consider ESG (environment, social, and governance) factors when choosing investments. It is, therefore, only one aspect of sustainable investing. Social and governance factors are also fundamental in this investing.
Investors not only analyze investments based on their long-term impact on environmental issues but also on social factors such as data security, demographics, and human rights as well as governance factors such as internal policies and processes of companies.
2. Sustainable investing is all about negative screening.
Some people confuse sustainable investing with screening strategies that ensure you only invest in ethical investments. While your personal beliefs and principles can help guide you when choosing sustainable investments, other factors also are considered.
Ethical investing helps you determine what you should not invest. It enables you to draw a line. If your religious or personal beliefs call for a non-violent approach to life, you will not invest in companies or projects affiliated with the production of firearms. Gregory Veotsch
Sustainable investing takes on a broader view. It helps you identify projects that will have a positive impact on the environment and society.
3. Performance does not get considered in sustainable investing.
When choosing sustainable investments, sustainability analysis is in use. Investments are analyzed based on ESG issues. Investors are often more concerned about the impact of making an investment on the environment and society than on profitability.
It, however, does not mean that performance does not get considered. Considering ESG issues helps to reduce risks and increase returns when compared to traditional methods used for measuring investment prospects. Many sustainable investments, therefore, do well in terms of profitability in the long-term.
4. Sustainable investing is a ‘millennial thing.’
Indeed, a majority of the investors with interest in sustainable investing are millennials. However, this type of investment is not a preserve for the young. Sustainable investing opportunities are available to all age groups. Many of the more seasoned investors are seeing the benefits of investing in sustainable products and are diversifying their portfolios to include these products.
5. Sustainable investing is only limited to rich countries.
Some people mistakenly believe that you will only be limited to companies in rich countries if you want to invest sustainably. However, there are many projects and companies in developing countries that fit the profile for sustainable investing. Your investments can, therefore, make an impact beyond the border. Gregory Veotsch
The takeaway
Sustainable investing allows investors to make their money support projects and companies that will have a positive impact on the environment and society. You no longer have to be o the frontline to play your part in supporting positive change. You can do so by investing in those on the front line.