Mastering sustainable investing and ESG principles

Sustainable investing has grown significantly in recent years due to increasing concern about global challenges and the performance of sustainable investments. Environmental, social, and corporate governance (ESG) issues, evidenced by daily news and personal experiences, have highlighted the impact on investments and communities, bringing sustainable investing into focus. Despite this interest, the complexity of terminology and approaches, along with a lack of regulatory clarity, makes it difficult for investors to navigate sustainable investing confidently. Sustainable investing encompasses various evolving methods that asset and wealth managers integrate into their processes, often leaving individual investors to figure things out through trial and error. However, steps can be taken to clarify sustainable investing, align it with personal beliefs, and understand its impact on portfolios.

Sustainable investing aims to achieve competitive financial results while benefiting people and the planet. It is an investment approach that considers the systemic impact of investments, acknowledging that long-term business profitability requires sustainable systems. Sustainable investors encourage companies to commit to net-zero emission targets and address ESG issues, pushing them towards stakeholder-centric business models. Terms like “responsible investing,” “ESG investing,” and “impact investing” are often used interchangeably, each emphasising different aspects of sustainable investing.

Investors have their own sustainability concerns influenced by personal, community, or broader environmental factors. Increased awareness of ESG issues leads many investors to integrate sustainability into their investment decisions, aiming to improve investments and drive profits while also improving the world. Identifying risks and opportunities from a sustainability perspective helps avoid negative outcomes and promote positive ones.

Getting started with sustainable investing involves understanding that it is not a single unified approach but a range of methods applying a sustainability lens to investments. Investors should consider their own goals and circumstances, seek advice from financial advisors, and ask specific questions about their investments’ alignment with sustainability. Evaluating issuers, assessing long-term sustainability, and reviewing ESG ratings and impacts can guide investment choices. As sustainability becomes a central theme for more funds, investors can tailor their exposure to different approaches and seek professional guidance to build a sustainable investment portfolio.

TEAM plc (LON:TEAM) is building a new wealth, asset management and complementary financial services group. With a focus on the UK, Crown Dependencies and International Finance Centres, the strategy is to build local businesses of scale around TEAM’s core skill of providing investment management services.

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