Two things: finance and sustainability; both topics not very often discussed in the same conversation. So, let’s start that conversation. When you think of sustainability, you rarely correlate that with making money, or money in general, especially since a sustainable lifestyle has always been thought of as an expensive or luxurious one to take after.
Well, that myth is busted. In order to live a sustainable lifestyle, you don’t need to be wealthy at all. If you consider the details and the real message behind a sustainable lifestyle, it might even save you some money over the long term. By adapting to a sustainable lifestyle, some upfront costs may surprise you, but over time, those costs will be paying for themselves in comparison to other choices you may want to make.
For example, purchasing a plastic bottle of water at corner store would cost you around $2, but purchasing a reusable water bottle would cost you around $10. For the cost of 10 plastic water bottles, you could purchase one that you can use for years. Refer to the many other blog posts categorized under ‘Lifestyle’ on our website for more tips.
When there’s an opportunity for saving, there’s also an opportunity to invest those savings as well. Most people aren’t aware of environment, social, and governance (ESG) funds and stocks. These types of investments were not familiar to me at all either but, through some research and discussions with others, I was able to familiarize myself with it a lot more.
As stated by RBC’s Global Asset Management division, ESG investing falls under socially responsible investing, which is an investment method that integrates a securities screening process to determine whether those companies create a positive or negative impact on nature and society.
For example, companies that sell products and services that negatively impact society or companies with poor ESG practices would have an overall negative ESG rating. Positively rated companies indicate good overall or specific ESG practices. They could also indicate additional positive effects on society through their products and services (i.e. renewable energies, etc.)
By investing in such funds or stocks, you are not directly contributing to the company’s capital for future projects. However, if you do believe that the company can create an impact, investing in the company can create an indirect positive effect in driving profits, company reputation, and its share price. While the reputation of sustainability is growing in terms of how people live their lives on a daily basis through the habits we take on, it is far from a creating a lasting impact on the financial sector.
With popularization of ESG investing, those that have been unaware about public companies with strong focuses towards sustainability can be awarded their much deserved attention.
ESG investments are for those individuals who wish to invest, but not support the lesser or not as ethical companies in the market. It would provide the investor with confidence that their money is being invested in companies that have an interest for the well being of nature and society.
This is a very important indicator for companies to progress towards more sustainable ways of operations to attract the additional investors for their company. Because management of most companies also love to see their stock price rise and continue to rise, the extra demand according to good ol’economics 101 would drive the price up as well. We can already see this impact taking place where huge corporations are taking their first steps towards sustainable operations. Check out Corporate Sustainability for more information on that.
This additional ESG indicator for consumers can also prove as a way to show consumers that those companies are making strides towards future of consumption. It may allow companies to not only look at their financial bottom line, but the Earth’s bottom line as well. The Morgan Stanley Capital International (MSCI) website is a great source to check out ESG ratings on companies.
Sustainability is Everywhere
Remember that sustainability is everywhere you look. It might be uncovered after a deeper analysis of the situation, but it will always be there. If you’re interested in ESG investments, definitely take a look into the functions and processes of them. Investopedia is always a great source for most things business-related. Check out Investopedia, Wealthsimple, CFA Institute, RBC Global Asset Management, and MSCI.