Sustainable Investing: The Benefits in Making Every Dollar Matter

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Sustainable Investing: The Benefits in Making Every Dollar Matter
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Australia’s biggest companies, including Microsoft, Woolworths and the Commonwealth Bank, have declared that investing in sustainable business practices is a golden opportunity for the nation to enhance the economy in the coming years. Technological research and development have advanced significantly, lowering the cost of green energy. Therefore, now is the best time for companies and investors to reap benefits from sustainable businesses, which will, in turn, reduce carbon emissions. One of the best ways to achieve this is by consulting renewable energy experts and developing their sustainability plans to accelerate their green transition along with their profits.

Why Does It Matter?

Sustainable investing is a socially responsible form of investment that has gained immense popularity today. It incorporates environmental, social and governance (ESG) factors during the investment decisions. People who choose to invest in this method put their money into organisations, companies and funds to generate measurable environmental and social impact, along with their financial return. It includes sectors like climate change, renewable energy, healthy, community development and safety. All the major investment firms consider this form of investment to be the future as the stakeholders are increasingly investing in sustainability preferences. The current market conditions with the low-bond yield and low-growth environment would drive up sustainable investment decisions. Sustainable investment is also used for risk management during uncertain and risky times, like during the 2020 global crisis.

How It Matters?

Asset managers, wealth managers and renewable energy experts in Australia have seen an increase in the influx of funds flowing into sustainable investments. They have also observed that providing millennials with value-based options for investment brings in more clients. This strategy has helped Australian investments grow over 107.4% over the decade and currently accounts for 18% of the assets managed in the industry. People have a growing interest and need to live their lives in alignment with their values. Fund houses are increasingly releasing more sustainable funds every year. Many new ESG funds have entered the market this year, and hundreds more have included ESG issues in their investment process.

What Are the Benefits of Incorporating Sustainable Investment?

Reports suggest that over 80% of the youth believe that the companies and government must make efforts to protect the environment, achieve equal development and enhance society. By investing sustainably, they can help promote green practices and diversify their portfolio.

It Increases Market Growth and Profits

As mentioned above, sustainable investing has gained a compound growth rate of 107.4% annually, over the past decade, according to the Forum for Sustainable and Responsible Investment report. The number of sustainable investment funds has increased by 300% since 2008. The market growth is a result of the evolving macro-economic trends and investment trends of millennials. Innovations in sanitation, clean water, energy production and distribution, healthcare, efficient transportation provide numerous opportunities for growth and profits. Sustainable investments have also outperformed when compared to traditional investments.

It Helps Combat Social Inequality and Environmental Abuse

Making sustainable investments into businesses under the guidance of renewable energy experts helps investors to be involved in the fight to act against gender inequality, climate change, equal pay, general malpractice and more. They can help increase the opportunities for sustainable businesses to grow and operate successfully in a green manner. It also helps improve social and environmental awareness across the nation. The stocks and shares from ESG companies invoke interest among people in Australia, which results in its exponential growth.

It Offers Lower Market Risk

A statistically significant and consistent finding is that sustainable investment funds experience 20% less downside deviation, which is significantly smaller when compared to traditional funds. Also, companies with a good ESG rating generally experience lower risk exposure in the market. It has significantly enhanced their performance and profitability.