There are four main ways to invest sustainably.

There are four main ways to invest sustainably. Returns are important, of course, but it’s arguably far better to make returns while investing in the causes that matter to you. And while the subsection of Environmental, Social, and Governance (ESG) investing has taken off in the last few years, there are a few different – lesser known – ways to invest sustainably. ✨

ESG integration: This approach incorporates the lens of ESG metrics – alongside traditional financial analysis – to identify strong businesses that can generate high returns sustainably, while mitigating risks traditionally associated with ESG.

Exclusionary screening: Here, you would exclude any stocks that don’t align with your moral and ethical values, regardless of how well they’ve performed. Typical examples include alcohol, tobacco, and fossil fuel companies.

Sustainability-themed investing: If you have an issue you’re particularly concerned about, like climate change for example, you can actively invest in stocks or exchange-traded funds (ETFs) that are exposed to the theme.

Impact investing: These investments tend to be project-specific and long-term in nature, like microfinance, say. The aim here is to provide a measurable impact through your investments, usually with a specific outcome in mind. 🌱

If the idea of sustainable investing resonates with you, you’ll need to decide which investment approach suits you first. That could be to invest only in sectors with the highest ESG scores, or to simply exclude companies that don’t fit with your values. Remember, though, that these choices should ultimately align with your financial goals and risk appetite.