What Is Strategic Sustainable Investing?

Strategic sustainable investing seeks to allocate money to companies that are at the forefront of the sustainability movement. Investors that utilize the strategy place a premium on putting money into companies that are environmentally friendly and are moving towards complete sustainability. This is a strategy that was developed by the Blekinge Institute of Technology in Sweden. Here are the basics of strategic sustainable investing.

The Strategy

With this strategy, investors will seek to earn a return on their investments. They accept the fact that they are taking a risk by investing money into these companies. At the same time, another objective of the investor is to provide additional investment capital to companies that are trying to become sustainable. By investing money in these companies, the investor can make money for himself and, at the same time, do his part towards helping the environment and society.

Sustainable Companies

The basic idea behind this strategy is that investors will allocate the majority of their money to companies that are trying to make a difference in society. In every industry, there are companies that are moving forward towards complete sustainability. Instead of relying on natural resources that are not sustainable, such as oil and natural gas, certain companies are implementing measures to move towards using more sustainable sources of power. These companies might use wind power, solar power or geothermal energy to provide the power that they use for their businesses. Investors that are interested in the condition of the environment will put an emphasis on putting money into these companies.

Choosing the Companies

One of the most important components of strategic sustainable investing is choosing the companies in which you will invest. This part of the process can be difficult, but it is critical to the success of the strategy. You have to be able to find companies that are focused on sustainability. These companies need to have clear business objectives that deal with moving more towards greener business operations. This means that a company has to have a sustainability plan, and it must be taking actions that promote sustainability.

ESI Chart

The Emerging Sustainability Issue (ESI) chart is a critical part of this selection process. Investors use this chart to help identify sectors and businesses that are moving towards sustainability issues. It helps identify high risk issues that will emerge in the near future for businesses of a particular sector or industry. 

After a sector is identified, the individual can make a list of issues that are related to sustainability. These issues are then categorized into groups such as high priority and lower priority. 

By looking at these issues and determining the severity of each one, the investor can then match up with companies that share these same ideals. If a company is working towards the solution of a high-priority sustainability issue, the investor would put a high priority on investing in that company. 

blog comments powered by Disqus
Scottrade