Sustainable investment, also known as impact investing or ESG investment, is a strategy to create a positive social and environmental impact while generating long-term wealth. Some experts believe that this type of investment can actually inhibit climate action. Tariq Fancy, former director of sustainable investments at BlackRock, described sustainable investment as a “dangerous placebo” because it “keeps government regulation to address the climate crisis at bay by feeding us another narrative in which our answers are resolved by the “free market”, which magically self-corrects. Sachs argues that the financial industry has helped delay government action to combat climate change because the private sector doesn't want regulations. In reality, many companies and entities in the financial sector are exerting strong pressure against the types of climate action that sustainable investors want to see.
Sustainable investing allows people to select investments based on their personal values and priorities. Initially, sustainable investing negatively evaluated companies and industries, often leading investors to sacrifice profitability for value-aligned investment options. However, in recent years, investors have used a positive evaluation of ESG risk factors to create a “best-in-class” modern investment approach that generates returns that are in line with and often exceed market benchmarks. Traditional investment provides value by converting investors' capital into investment opportunities that involve risks commensurate with expected returns. Sustainable investment balances traditional investment with environmental, social and related governance (ESG) knowledge to improve long-term results.
ESG investments, often referred to as sustainable investments, can ultimately offer aspects of both worlds - save the planet and, potentially, generate financial results. For decades, human activities have been blamed for harming our environment, wildlife and climate. With ESG investment, we can play a more active role in solving these environmental and social problems. The content of this website is for informational purposes only and does not take into account the specific investment objective, financial situation and particular needs of any particular person, and Manulife does not represent that the securities, investment products or services referred to, discussed on this website or that can be accessed through it are appropriate for a particular investor. There are no accepted definitions of what constitutes sustainable investment and, until now, there have been no consistent regulations requiring the disclosure of climate risks or any coherent approach to accounting for emissions. This socially responsible investment is also called ESG investment because it considers the environmental, social and corporate governance aspects of a company. Adapting to a sustainable investment environment will be a challenge for companies and will require changes in existing culture, technology and processes.
The information contained here should not be considered investment advice or a substitute for any investment advice. Other factors of sustainable investment must also be taken into account, but the environmental element has a time limit. Millennials identify inequalities around the world such as climate risk, global hunger, poverty and access to health care which ultimately creates a greater sense of global responsibility and drives demand for sustainable investments. More and more investors - especially younger ones - want to invest in companies that take into account climate risks and that are sustainable and socially responsible. Contact an organization in your area committed to conservation and the fight against climate change if you are considering creating a non-profit organization to invest money in sustainable companies. If you're thinking about investing sustainably, understand all three investment strategies and be realistic about the purposes, strategies, and results of the ones you choose. Manulife Singapore is a member of the Singapore Investment Management Association (IMAS) and a fund management company included in the Provident Fund's Central Investment Plan (CPFIS).
Clean water and sanitation, innovations in energy generation and distribution, improved health care and more efficient transportation offer a wealth of opportunities for sustainable investment growth. Investing in companies oriented to ESG criteria (those with sustainability plans and objectives) can help the environment and mitigate climate change. Companies best prepared to address sustainable investment and the intergenerational transfer of wealth together will not only capitalize on the acquisition of new customers but will also effectively serve their current customer base.