Description: Sustainable investing refers to investment strategies that integrate environmental, social, and governance (ESG) factors into the decision-making process. This approach seeks not only to generate financial returns but also to contribute to sustainable and responsible development. Sustainable investing is based on the premise that companies that operate ethically and responsibly, minimizing their environmental impact and promoting social well-being, are more likely to achieve solid long-term performance. Key characteristics of sustainable investing include assessing risks and opportunities related to climate change, workplace diversity, corporate transparency, and community engagement. This type of investment has gained relevance in recent years, driven by a growing social awareness of environmental and social issues, as well as investor demand for options that align their personal values with their financial decisions. Sustainable investing not only seeks economic benefit but also promotes a positive impact on society and the environment, becoming a key tool for addressing current global challenges.
History: Sustainable investing has its roots in the socially responsible investing (SRI) movement that began in the 1960s when investors started to avoid companies involved in ethically questionable activities, such as apartheid in South Africa. Over the decades, this approach has evolved, incorporating environmental and governance criteria, especially from the 2000s when climate change and sustainability became central themes on the global agenda. In 2006, the Principles for Responsible Investment (PRI) initiative was launched by the United Nations, promoting the integration of ESG factors into institutional investing, marking an important milestone in the formalization of sustainable investing.
Uses: Sustainable investing is primarily used in portfolio management, where investors select assets based on ESG criteria. It is also applied in the creation of investment funds that focus on sustainable companies or projects that have a positive impact on the environment and society. Additionally, companies can use sustainable investing as a strategy to attract capital, enhance their reputation, and meet the expectations of consumers and regulators.
Examples: Examples of sustainable investing include investment funds that exclusively invest in renewable energy, such as the ‘iShares Global Clean Energy ETF’, which focuses on companies in the clean energy sector. Another example is the use of green bonds, which are debt instruments issued to finance projects that have environmental benefits, such as the construction of sustainable infrastructure. Additionally, many large corporations are adopting sustainable investing practices in their pension funds, prioritizing companies that meet ESG criteria.
