Sustainable investing - Investing with impact
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Sustainable investing - Investing with impact
Anna Mara, Swiss Fintech Ladies
Sustainable investing - Investing with impact
Our world is now struggling with many challenges. Whether it is more and more social challenges or the growing environmental problems, it is not getting better.
Meanwhile, more and more investors are realising that their investment decisions should not only generate financial returns, but can also have a positive impact on society and the environment. This growing realisation has led to an evolution in investment practice where financial performance and sustainable change go hand in hand.
According to a study conducted by Deloitte, Swiss companies invested 75% in sustainability in 2022. Unfortunately, in the Deloitte 2023 CxO Sustainability Report, many companies are pessimistic. As many as one fifth do not even believe that economic growth is possible by achieving climate targets.
The basis of sustainable investing with impact is the integration of environmental, social and governance (ESG) criteria into the investment process. Companies are not only evaluated according to financial key figures, but also according to their commitment to environmental protection, social responsibility and effective corporate governance. Impact investors specifically select companies that are leaders in these areas and can generate stable returns over the long term.The best-known sustainability index is the Dow Jones Sustainability Index.
A key aspect of impact investing is the measurability of the impacts achieved. Investors strive to set clear and quantitative targets for the social and environmental benefits they want their investments to generate. This requires precise data collection and analysis to ensure that the intended goals are actually achieved. The development of measurement metrics and standards is therefore an important step to ensure the credibility and transparency of the impact investing market.
Rising investor demand
A driving factor for the growth of sustainable impact investing is the increasing demand from investors. In particular, younger generations, such as Millennials and Generation Z, place great importance on their investments making a positive difference. These investors are willing to use their financial power to support companies and projects that are in line with their values. This has led the financial industry to offer a wide range of sustainable investment products, from green bonds to sustainable investment funds to direct investments in social enterprises.
Impact investing goes beyond traditional forms of sustainable investing. It aims to achieve concrete, measurable positive impacts on social, environmental and governance areas. Instead of just avoiding companies that operate in controversial industries, impact investors specifically look for opportunities to invest in companies, projects and initiatives that actively contribute to solving global problems. This can take the form of investing in renewable energy, education, healthcare, clean water and more. In Switzerland, there is an upward trend in impact investing.
Impact investing a promising vision for the future of financial markets. It takes the traditional understanding of investment to a new level, where financial returns and social responsibility are not seen as opposing goals. Rather, investment can help address pressing global challenges and create a more sustainable and equitable world. While there are challenges along the way, the potential and positive impact that can be achieved are undeniable.
https://www.springer.com/series/15807/books
https://link.springer.com/book/10.1007/978-3-031-31297-7
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Karen Wendt
President of SwissFinTechLadies