🌱 ESG, or environmental, social and governance investing, is a way to build a more ethical investment portfolio.
Traditional investing is two-dimensional. It’s looking for the best opportunities in terms of risk and returns while ignoring the impact on people and the planet. Sustainable investing adds a much-needed third dimension – the larger impact on people and the planet. The investment world calls this dimension ESG (environmental, social and governance).
🌱 Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example.
🌱 Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates.
🌱 Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Grünfin's 4 tips for using ESG in your investment decisions:
💡 Considering ESG in your investment strategy is not a tree-hugging version of investing that sacrifices gains for the greater good. Sustainable investing allows you to support the causes you believe in and earn market-based financial returns (read more here).
💡 To assist investors in better understanding the types of investments a fund manager makes and the impact they have on the planet, the European Union’s Sustainable Finance Disclosure Regulation (SFDR) came into force in March 2021. This specifically relates to ESG issues.
💡 European Commission has published an online brochure How green are your finances? advising to look for funds with high Environmental, Social and Governance standards, which will not invest your money in harmful sectors.
💡 You can read more about how Grünfin considers ESG and other criteria when selecting the funds in our investments in the blog post about our investment principles.
Finding the best sustainable ETFs and setting up a diversified green investment portfolio does not need to be difficult.