From tackling climate change, to equal rights and animal welfare - you can select investments based on your values, in a way that could help you achieve your long-term financial goals.
Investors are increasingly choosing sustainable funds as a way to create a better world.1
The global population is expected to reach 9 billion by 2045.2 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. This means you're not only investing in your own future, but investing in positive change and progress too.
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.
It's possible to invest with a conscience and make a profit at the same time.
Environmental and societal 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
Companies that can create value for all stakeholders (including the environment and society) are more likely to succeed in the long term and deliver stronger financial returns for shareholders and investors.3
Remember, the value of any type of investment can fall as well as rise and you may not get back what you invest.
Sustainable investment should be seen as a medium to long-term commitment, meaning you should be prepared to invest for at least five years.
Sustainable investing can use different methodologies and may be referred to as:
environmental, social and governance (ESG) investing
socially responsible investing (SRI)
While they broadly mean the same, there are some key differences in the way they work, which are important to know before you choose how to invest.
Let's take a closer look at some of the main approaches and what they involve.
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 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 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.
|ESG framework||Example||Factors include:|
|Environmental||What impact does the company have on the environment?||
|Social||How is the company supporting its employees, clients and communities?||
|Governance||How is the company governed or managed?||
|Example||What impact does the company have on the environment?||What impact does the company have on the environment?|
|Example||How is the company supporting its employees, clients and communities?||How is the company supporting its employees, clients and communities?|
|Example||How is the company governed or managed?||How is the company governed or managed?|
If you're considering sustainable investing, we can help you get started.
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.
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.
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You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this article.
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