The Importance of Sustainable Investing: Definition, Opportunities and Advantages

Talking about sustainability is not only about the environment, but now there is such a thing as sustainable investing or sustainable-oriented investment.

Sustainable investing is an investment activity that pays attention to ESG, Environment, Social and Governance factors.

This is important to do, considering that now a more sustainable life is also being improved in order to make the earth better.

In Sustainable Investing, choosing instruments and investment issuers not only considers profit factors but also ESG factors.

In Indonesia, even the world of this type of investment is also increasingly in demand because.

Not only because it has a good impact on the environment, but also promising benefits for developing funds.

Come on, see the full explanation!

What is Sustainable Investing?

Sustainable investing is considered an investment activity that is at the same time socially responsible.

The reason is none other than that the implementation considers environmental, social and corporate governance factors (ESG factors).

Later, investors will consider these three factors when they want to invest their funds into a company.

For example, companies that are sustainable are the solar panel industry, biogas, electric car transportation, to the bio-based sector.

In short, the company uses investment proceeds from investors to contribute to preserving nature and the environment.

ESG Criteria in Sustainable Investment

Milieu

Pay attention to factors related to the preservation and sustainability of nature and the environment.

– Water and energy use

– Waste treatment

– Pollution management

- Forest conservation

– Treat animals

Social

The factor that is considered is corporate as well as social relationships.

– Relationships with suppliers and distributors

– Contributions to the community such as donations or volunteers.

– Related to human rights

– Physical and mental health of employees

– Gender equality

– Diversity

– Customer satisfaction

– steakholder interests

Corporate Governance

Pay attention to factors related to the management standards of a company.

– Transparent accounting and financial statements

– Conflict of interest

– Eradication of bribery & corruption

– Eradication of illegal activities

– Political involvement

– Whistle blower

– Audit committee

The criteria above, can be used as one way to do fundamental analysis before investing.

That way, investors can find out which investments should have a big financial risk due to their company's practices related to ESG.

How Important Is It to Do Sustainable Investing?

The current generation tends to prefer sustainable investments because the results create positive changes in different aspects of life.

The principle of sustainable investing also promises not only financial benefits, but also social benefits in the long term.

So, investors do not think about personal gains alone but also benefits for sustainable living in the future.

But of course, just like when making conventional investments, you have to choose the right instrument that can be profitable.

The reason is because after all, the purpose of investing is to make a profit financially.

Sustainable Investing Opportunities

The state of the pandemic that has hit the whole world brings great changes to people's lives,

Awareness to maintain health, care more about the environment and make investments has also increased, as well as in Indonesia.

Well, seeing this phenomenon, many capital market experts say that later more and more young people are investment literate while being more concerned about the surrounding environment.

Therefore, they are also expected to choose to invest in sectors that support and encourage positive changes in life, for example nature.

Indirectly, of course, it makes investment companies carry out evaluations so that they can adjust to market wishes.

Finally, many new companies have sprung up that will be engaged in the sustainability sector.

Thus, the opportunity for investors to make a profit will also be even greater and grow.

What are the Advantages?

As we already know, the global economy is one of the direct impacts of the pandemic.

Many things happened, ranging from stock prices also slumping and even minuses, sluggish global investment, to the impact that the wheels of the economy were also unable to move in a positive direction.

But at a time when many types of investments are declining, this has no effect on sustainability funding, you know.

Reporting from CNBC, in the first half of the pandemic in 2020, stocks to securities became sustainable investments that were more resistant to global recessions.

In fact, ESG investment experts also mentioned that sustainable investment will be a promising investment.

There are many reasons, namely the increasing awareness of the global community about the dangers of climate change, the sustainability of ecosystems to the impact of environmental pollution from five medical devices due to the pandemic.

Start Doing Sustainable Investing

If you are interested in making sustainable investments, you can choose a variety of instruments such as stocks, mutual funds to bonds.

Choose an issuer that is related to ESG factors.

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