What is Sustainable investing?

First things first. Sustainable investing directs investment capital to companies that seek to combat climate change, environmental destruction, while promoting corporate responsibility. Known also as socially responsible investing, or social investment, or ethical investing, it is basically any investment strategy which seeks to consider both financial return and social/environmental good to bring about social change.

In other words, it is the movement of large organisations towards investing in projects and companies that are working towards making the planet a better place.

How is Ireland doing in this area?

Ireland is committed to positioning itself as a Green Finance Centre. The Ireland for Finance Strategy for the development of Ireland’s International Financial Services sector (IFS) comprises sustainable finance as one of its priorities citing 81% of asset managers having a responsible investing policy in place.

Ireland was one of the first European movers to issue a green bond raising €3bn. And in 2018 we were the first country to sell off our investments in fossil fuel companies.

However, investments in these areas have accelerated in recent years, and the EU’s action plan on sustainable finance puts pressure on investment firms to include ESG criteria in the financial advice they offer clients. Because clients are now demanding funds with environmental, social and governance credentials.

Recently, there was an announcement from the world’s largest funds manager, BlackRock Inc, that it intends to make sustainability the “new standard for investing” showing us that sustainable investing is about to go mainstream.

“Climate change has become a defining factor in companies’ long-term prospects . . . sustainable investment options have the potential to offer clients better outcomes,” says BlackRock chief executive Larry Fink. “We want to make sustainable investing more accessible to all investors and lower the hurdles for those who want to act.”

Hopefully, one more step in the right direction for our large corporate companies.

Photograph: VCG (via the Irish Times)