Sustainable Investing Goes Mainstream: How Has It Evolved?

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Investors worldwide are heeding the urgent calls to address environmental, social, and governance challenges that continue to clobber the human race. As the effects of climate change, political instability, and forced labor or slavery become evident, so are many investors investing for a cause. Likewise, the number of sustainable investing companies is on the rise.

Mainstream Impact Investing

Impact investing has moved out of the shadows as both retail and institutional investors acknowledge there is more to be done in addition to investing for returns. Unlike in the past, investors no longer invest just for returns. Investors want to know where their money is being invested and the kind of impact it is poised to have on social, environmental, and governance issues.

Similarly, shareholders and stakeholders in companies are increasingly passing resolutions requiring fund managers to only invest in companies’ projects and programs that have the potential to have a significant in addressing ESG issues.

However, it does not mean that investors have given out completely on returns.

“Sustainability does not mean giving up on returns. In fact, it means investing in projects with the prospects of generating optimum returns while also having a significant impact in solving a wide array of environmental, social, and governance issues that threaten the human race,” said Ekaterina Chernova, the Altruist League’s Head of Research.

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Customer’s shareholders and employees aligning their values and leveraging their investments for the public good should force institutions and companies to make Green investing part of their long-term strategy.

Impact Investing Diversification

Contrary to perception, institutional investors are not the only ones fueling socially responsible investing. The emergence of sustainable advisory firms such as the Altruist League has made it possible even for the smallest of investors to engage in impact investing. Conversely, retail investors have started directing their money to companies that are driving changes for the future.

A majority of customers in the U.S more than 80% have already hinted that they want to align their spending patterns with their values. Suggestions that as many as 30% of investors in the U.S already have sustainable investments in their portfolios affirms how mainstream impact investing has become.

The fact that sustainable investing is growing across all ages wealth levels and regions are also a good sign affirming the ever-growing need to invest for a purpose.

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Impact Investing Growth

Unlike in the past, impact investing is no longer a fad, but a trillion-dollar industry that can only grow bigger as the need to save the environment and avert social and governance issues through investments become a reality.

Investors realizing and acknowledging that caring for the environment, gender equity, or social justice amounts to sound investments should continue to fuel green investing worldwide. As the world goes green as part of the impact of investing a number of ideas and investment trends are increasingly cropping up.

Similarly, demand for sustainable impact investments should continue to grow according to Morgan Stanley’s study, the fact that more people are interested in the ESG approach should see sustainable investing companies elicit strong demand in the years to come.

Sustainable investing funds clocked record highs of $12 trillion in the U.S and $30 trillion, in assets under management, globally in 2018. The figures are believed to have edged higher with the proliferation of sustainable advisory firms such as Altruist League that are providing insights and data on some of the best areas to invest to have the biggest impact on society.

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Sustainable Investing Trends

Investments towards green energy are on the rise as the need to curb carbon emission through fossil fuels continues to grow. Likewise,  investors are increasingly investing in power generating companies that don’t rely on burning fossil fuels to generate electricity but rather wind, water, and solar.

Water stocks are also increasingly eliciting strong interest in the equity markets amid growing fears that the world could run out of fresh water due to climate change. Similarly, investors are investing in companies focused on replenishing supplies as part of an effort of conserving the environment.

Companies focused on pollution controls are also in the spotlight as the need to reduce greenhouse gas emissions in industrial power plants continues to rise. Companies focused on pollution technologies should continue to attract huge capital inflows from impact investing-focused investors.

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