The Rise of Sustainable Investing: Aligning Your Portfolio with Your Values

Investing is no longer the opaque activity of select few suit-wearing bigwigs in London’s Square Mile. With thanks to rapid technological development and the democratising influence of the internet, more people than ever are able to engage with a form of financial enrichment previously reserved for the few.

With investing now available through banks and digital apps, many are flirting with the idea of shoring up their long-term finances by placing money in stocks and shares. Investing hasn’t fully shaken its reputation as an often-immoral form of money-making, though, particularly when oil and gas continue to be major money-makers for big investors. Between this and a newfound global interest in alternative energy sources, a new form of investing has emerged: sustainable investing.

What is Sustainable Investing?

Sustainable investing is, largely, as it sounds. Sustainable investors will earmark businesses with positive environmental impacts, or that further the cause with respect to green energy. They might also look for businesses committed to meeting stringent ESG (Environmental, Social, and Governance) criteria, whether directly benefitting local communities or green-belt land with profits or offsetting their existing carbon emissions.

Benefits of Investing Sustainably

Sustainable investing might at first seem like a simple way to ethically engage with the stock market, and hence benefit from the growth potential of financial markets without ill feeling. However, there are further benefits.

For one, a combination of scarcity and growing climate consequences with respect to fossil fuels has made alternative-energy businesses far more lucrative; the earning potential of green businesses is higher now than ever. For another, many established green investments are lower-risk, enabling a diverse portfolio less likely to suffer from market shocks.

How to Identify Green Investment Opportunities

Green investment is easy on the face of things, but so too is investing. For investors of any level of experience, research is an absolute must. Thankfully, there are many resources to simplify this process – and many pre-compiled ethical funds for green investment that you can browse with your own values in mind. Funds or ETFs enable you to benefit from the green surge without having to painstakingly build your own portfolio, and are based on superior knowledge of the markets in question.

Navigating the Challenges of Sustainable Investing

Sustainable investing is not without its challenges, though – and particularly so if you are of a mind to build your own green portfolio from scratch. One of the biggest hurdles to a true green portfolio is greenwashing, a practice which some unscrupulous businesses use to appear sustainable without following through on sustainable initiatives. It is these businesses that make research especially important, from verifying business claims to tracking down unsustainable business connections.

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