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What is sustainable investing?

Sustainable investing is a way of generating long-term financial returns while advancing sustainable solutions and outcomes.

Here we explore why sustainable investing is important, the different types of sustainable investing and how you can invest sustainably with HSBC.

Why sustainable investing is important

Sustainable investing benefits society

The global population is expected to reach 9 billion by 2037. As people live longer, more of us will be affected by the way our nations are run, the state of our environment and the wellbeing of the people in it. 

Your investment can help sustainable companies develop, innovate and grow. 

When you invest sustainably, more of your money is going towards companies that are making a difference. 

Sustainable investing also recognises that companies that aim to solve the world's biggest challenges could be those best positioned to grow.

Sustainable investing benefits you

As an investor, you're likely to want to know where your money is going and what it's being used for. When you invest sustainably, more of your money is going towards companies that are making a difference. 

Sustainable investing also recognises that companies who aim to solve the world's biggest challenges could be those best positioned to grow.

Is sustainable investing profitable?

Environmental and social issues can impact share prices. Factoring these into your investments could help:

  • reduce the level of risk
  • increase the resilience of your investments
  • deliver long-term capital growth

But bear in mind, there's no guarantee that sustainable investments will produce returns similar to those which don’t consider these factors.

Remember – the value of any type of investment can fall as well as rise and you may not get back what you invest.

And all investments should be seen as a medium to long-term commitment, meaning you should be prepared to invest for at least 5 years.

Types of sustainable investing

Sustainable investing can use different methodologies and may be referred to as:

  • ethical investing
  • environmental, social and governance (ESG) investing
  • impact investing
  • socially responsible investing (SRI)
  • values-based investing
  • conscious investing

While they broadly mean the same, there are some key differences in the way they work. These are important to understand before you choose how to invest.

Ethical investing

Ethical investing actively avoids companies or industries that have a negative impact on society and the environment. This is called negative screening. Sectors such as tobacco, animal testing, gambling and oil and gas are typically excluded from this type of investing.

ESG investing

ESG investing actively selects companies that have a positive impact on the world. It's less restrictive than ethical investing as it considers companies that are adapting, such as oil companies that invest in clean energy.

Impact investing

Impact investing actively selects companies whose positive impact on the world can be measured. For example, those who generate a specific amount of recycling or save a certain amount of water.

Sustainable investing at HSBC

We use this framework to make sure the companies we work with are doing more to tackle environmental, social and governance (ESG) issues.

ESG framework table
ESG framework Example Factors include:
Environmental What impact does the company have on the environment?
  • climate change
  • air and water pollution
  • waste management
  • energy efficiency
  • water shortage
Social How is the company supporting its employees, clients and communities?
  • human rights
  • consumer privacy
  • gender equality
  • data security
  • health and safety
Governance How is the company governed or managed?
  • board structure
  • company ownership
  • financial reporting
  • business ethics and culture
  • executive remuneration
ESG framework table
ESG framework Environmental Environmental
Example What impact does the company have on the environment? What impact does the company have on the environment?
Factors include:
  • climate change
  • air and water pollution
  • waste management
  • energy efficiency
  • water shortage
  • climate change
  • air and water pollution
  • waste management
  • energy efficiency
  • water shortage
ESG framework Social Social
Example How is the company supporting its employees, clients and communities? How is the company supporting its employees, clients and communities?
Factors include:
  • human rights
  • consumer privacy
  • gender equality
  • data security
  • health and safety
  • human rights
  • consumer privacy
  • gender equality
  • data security
  • health and safety
ESG framework Governance Governance
Example How is the company governed or managed? How is the company governed or managed?
Factors include:
  • board structure
  • company ownership
  • financial reporting
  • business ethics and culture
  • executive remuneration
  • board structure
  • company ownership
  • financial reporting
  • business ethics and culture
  • executive remuneration

What next?

If you're considering sustainable investing, we can help you get started.

Speak to a Wealth Manager

If you're looking for advice on sustainable investing speak to one of our Wealth Managers who can advise which funds might be suitable based on your investment needs. So you can be confident your money is behind companies trying to make a difference - at a level of risk you're comfortable with.

To invest with us, you need to have an HSBC current account or savings account. Eligibility criteria and charges apply.

Explore more

1Source: Schroders: Global Investor Study 2020

2Source: United Nations (UN): Global population Dynamics

3Source: STERN: ESG and Financial Performance

Disclaimer

Please remember that the value of investments, and any income received from them, can fall as well as rise, is not guaranteed and you may not get back the amount you invested. This could also happen as a result of changes in currency exchange rates, particularly where overseas securities are held or where investments are converted from one currency to another. We always recommend that any Investments held should be viewed as a medium to long-term investment, at least five years.

HSBC Bank plc, acting through its registered branches in Jersey, Guernsey and the Isle of Man and the HSBC Group are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC Bank plc, acting through its above mentioned branches, and the HSBC Group give no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article.

This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions for them. This article does not constitute an invitation, or a solicitation, to make an investment in any way to any person to whom it is unlawful. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC Bank plc, Jersey Branch, Guernsey branch, Isle of Man branch and the HSBC Group are not responsible for such use or reliance by you.

HSBC Bank plc, Jersey Branch has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information. Any opinions expressed are given in good faith but no liability is accepted for any direct or consequential loss arising from the use of this information. The opinion quoted is for information only and does not constitute investment advice or a recommendation to any reader to buy or sell investments. 

Any market information shown refers to the past and should not be seen as an indication of future market performance.

You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this article.

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