What is sustainable investing?
Traditional investing delivers value by translating investor capital into investment opportunities that carry risks commensurate with expected returns. Sustainable investing balances traditional investing with environmental, social, and governance-related (ESG) insights to improve long-term outcomes.
In many ways, sustainable investing can be seen as part of the evolution of investing. There is a growing recognition that some ESG factors are economic factors, especially in the long term. Therefore, it is important to incorporate material ESG factors into investment strategies..
There are three critical elements of sustainable investing:
- Adds to asset management theory and does not mean a rejection of foundational concepts
- Develops deeper insights about how value will be created going forward using ESG considerations
- Considers diverse stakeholders, consistent with how companies are developing
Why is sustainable investing important?
Interest in sustainable investing continues to grow, and the pressure is on for organizations to move toward a sustainable model. In an era when the investment industry is challenged by rising end-client and regulatory expectations and challenging economics, the alternative of maintaining the status quo leaves the industry vulnerable to decline.
The next stage of development will depend heavily on industry leadership and innovation in investment thinking and practice, as well as data management.
Want to learn more about sustainable Investing?
Choose your own learning path through our sustainability certificates: the foundational Certificate in ESG Investing and the advanced Climate Risk, Valuation, and Investing Certificate.
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