What is the State of Sustainable Investments in 2022?

Please welcome Liv Perman, a writer and financial investor living in Portugal and a reader of 21st Century Tech Blog. This is her first contribution to the site. Liv frequently writes about sustainability, health, green policy, and environmental issues. She has an interest in how new technologies can make the world a better place and is a volunteer working on animal welfare issues. She holds two baccalaureate degrees, one in Media and Training, and another in animal-assisted therapy (AAT).

In this posting, Liv talks about sustainable investment and ESG. Sustainability is the new standard for company public disclosures today. A global framework is under development known as the TCFD which stands for Task Force on Climate-Related Financial Disclosures. Described as the gold standard, few are taking issue with its disclosure requirements. But ESG is more than just a measure of climate consciousness on the part of public companies. Sustainability has social and governance implications as well.

Sustainable investing is an investment trend that is growing in importance every year because of the climate crisis. Extreme weather events have been happening around the world: severe floods in Europe, more Category 4 hurricanes, cyclones, and typhoons roaming over the world’s oceans and making destructive landfills, heat domes in the western United States and Canada, wildfires in Australia, Western North America, and Siberia, and extreme cold events in places that have never experienced these temperatures before. These are just some of the recent examples of major climate disasters that happened in 2021.

If you are investing your hard-earned money into businesses that are dealing with the aforementioned, you need to be aware of how companies are adjusting the way they operate now and in the future in response to this new normal.

The category known as green investing is one that is growing in response to climate change. It’s about investors wanting their money to back good outcomes for the planet through portfolio investments that contain companies focused on a sustainable future. They are also looking for solid investment performance from these companies. That’s why the investment industry is being driven to a new paradigm, sustainable investments that follow and report their ESG (Environmental, Social and Governance) credentials. 

ESG is the acronym that measures green investments. It is about how companies are aligning their operations to complement the natural world. The E stands for, the environment. The S stands for social responsibility measuring how management, employees, and supply chain interact with the planet sustainably. G stands for governance including a company’s financial transparency, full disclosure on executive and directors’ wages, stockholders’ privileges, and more.

There are many banking and financial advisors, insurers, and brokers today that have aligned their portfolios to ESG standards. Depending on your strategy, your investment style and your goals, you can become a shareholder in one of the companies they recommend, or invest in a fund that represents a pool of companies in one or more industry sectors where the portfolio is evaluated based on ESG performance. Or you can trade CFDs (climate-related financial disclosures) on environmentally friendly and ethical trading platforms, like easyMarkets. 

The sustainable investing sector includes many sub-sectors such as clean energy producers, sellers, or distributors, companies offering services, and firms producing technologies or special materials. There is also the ability to invest in companies of different sizes, from penny stocks, to small caps, to large multinationals.

Why Sustainable Investments Are So Promising In 2022

Extreme weather events seem to have made climate change far more real to people in 2021. Governments are reacting in the face of increasing public pressure to implement policies and programs to protect their populations. They are setting climate goals to achieve net-zero emissions faster, and are approving massive investments to modernize and harden infrastructure making it more efficient and greener. But ESG investing is more than just mitigating climate change by reducing the carbon footprint of companies and by better use of the planet’s natural resources. It’s more than responsible waste management and combatting pollution.

Socially responsible investments are an unstoppable force because they also align with the need for a sustainable future for humanity. They are aligned with:

• Research into projects that benefit society, such as cancer research, finding vaccines that stop pandemics, or support for vulnerable social groups.
• Development of new technologies such as the creation of more sustainable buildings, or making the grid smarter.
• Programs that support education, health, equality, integration, and diversity.

The Bottom Line

While more and more investors want to invest in companies that are focused on protecting the planet and improving the environment, they are also looking at social issues and labour rights. They want to socially responsible investments that reflect fair social and governance practices. They want companies that are profitable while doing no harm to the planet and society.

That’s why portfolios and offerings focused on sustainability are here to stay and expected to grow in this decade and beyond. This is especially true when it comes to renewable and clean energy companies working with photovoltaics, wind turbines, geothermal, and hydroelectric power. Companies leading in technological advancements and innovations in green energy are among the hottest ESG prospects out there for prospective sustainability investors.