Sustainable investing: what is it and how can it be done?

Sustainable investing involves investing money in economic activities that contribute to environmental or social well-being, in line with sustainable objectives, and in companies that follow good governance practices.

In other words, in addition to potential profitability, the environmental, social and governance aspects of investments (so-called ESG factors) are also taken into consideration. That’s the goal the money you invest can have a positive impact on the worldinstead of financing activities that are harmful to the environment or society.

Sustainable investing is gaining popularity as consumers become more aware of the damage certain activities cause to the environment and ecosystems. A recent Morgan Stanley survey found that more than three-quarters of private investors worldwide say they want to invest in sustainable companies or investment funds that take into account the positive environmental or social impact of their activities.

A General Peace of mind is aware of its environmental and sustainable responsibilities. Therefore, we offer the investment product Peace of mind Green Investment which complies with the transparency requirements referred to in Article 9 of the Sustainable Finance Disclosure Regulation (SFDR). Choose a greener and more responsible future. Be part of this positive change!

Learn more about sustainable investing with these four topics:

• How to make sustainable investments
• Benefits of sustainable investments for the environment
• How to integrate sustainability into your investments
• Next steps for sustainable investing

How to make sustainable investments

Investing sustainably means different things to different people. Investors can use a variety of methodologies to evaluate the sustainability of your investmentsin a certain sense align them with the issues they consider fundamental.

Deciding what your personal sustainability priorities are is an important component of tailoring your investment strategy to your goals. Are you particularly concerned about climate change? Or do you believe in healthcare accessible to all? Your values ​​will influence where you decide to invest your money.

In general, this is stated in the European Commission Regulation on the disclosure of information on sustainable finance (SFDR). an investment is sustainable if:

1. contributes to an environmental or social objective. For example, the production of renewable energy or the construction of affordable housing in developing countries;
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2. does not significantly harm any environmental or social objectivesthat is, it does not violate human rights or present practices that are harmful to the environment;
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3. the beneficiary companies are governed by good governance practicesin particular with regard to management structures, employment relationships and salaries, as well as compliance with tax obligations.

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In the context of a greater awareness of sustainable investmentsSome companies they were accused of “greenwashing» (literally, greenwashing). In other words, they exaggerate what they do for the environment to attract more eco-conscious consumers.

It can be quite difficult to evaluate how “green” an investment is. However, as billions of dollars are invested in ESG sustainability funds, regulators seek to closely monitor investments to ensure that green investment funds are actually invested in companies with ESG strategies.

And they are also working for make the sector more transparentapplying more rigorous criteria to evaluate sustainable investments, which is why it is increasingly so easier to invest in a way that aligns with your values.

Benefits of sustainable investments for the environment

If we consider that climate change is a short- and long-term threat to our planet and all beings that inhabit it, preserve and protect the environment it often represents a priority in sustainable investments. Indeed it is one of the «megatrends» financial which is influencing markets and investment decisions.

Since 1970, Earth’s surface temperature has risen faster than in any other 50-year period in the past 2,000 years, says the United Nations Intergovernmental Panel on Climate Change (IPCC). The average temperature at the Earth’s surface is expected to reach or exceed 1.5 degrees Celsius above pre-industrial temperatures in the coming decades, impacting the global environment and society.

The European Commission has recently developed a taxonomy of objectives (Regulation Taxonomy) that helps companies and investors determine whether an economic activity is environmentally sustainable.

This promotes six environmental objectives:

1. Mitigation of climate change

The transition from fossil fuels to “clean” or renewable energy is an essential factor in the fight against climate change by reducing global warming. Renewable energy accounted for 23% of the European Union’s energy consumption in 2022 and the goal is to increase this figure to 45% by 2030.

2. Adaptation to climate change

Changing our actions to protect ourselves and the environment from the impacts of climate change. An example: placing solar panels on the roof to generate electricity.

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3. Sustainable use and protection of waters and marine resources

Use and manage water and oceans rationally. For example, planning sustainable urban drainage systems before housing construction.

4. Transition towards a circular economy

The European Commission’s circular economy action plan encourages sustainable consumption and the reduction of waste production. AS? For example, through the buying and selling of second-hand goods and the strengthening of recycling facilities.

5. Prevention and control of pollution

The collection and transportation of hazardous waste that can harm human health and the environment.

6. Protection and restoration of biodiversity and ecosystems

The conservation and recovery of habitatecosystems and species. According to the UN, approximately one million animal and plant species are at risk of extinction. Many could disappear within a few decades – the highest number ever recorded in human history.