Sustainable finance is going mainstream, in part because it can create up to 27x more positive impact than other environmentally conscious actions! This Earth Day, we want to help you become a part of the movement, with our top tips to help you invest in a way that works for you and the planet.
1. Divest from fossil fuels
Over the last few years, a movement to divest from fossil fuels has been driven not only by climate concerns, but also due to the increased risk resulting from an expected fall in demand in the coming years. Nevertheless, investment in these resources is still widespread. While you’re probably not investing directly into coal and oil stocks, the funds, bonds or pension schemes you’re invested in may be – even those that meet ESG (environmental, social and governance) criteria. A simple, impactful action is examining your existing investments to ensure you’re not unwittingly fueling the world’s most polluting industry.
2. Invest in the right funds
Exchange-traded funds (ETFs, exchange-traded equity funds that track and follow stock indices) are trending and are now an important part of many private investors’ investment strategy, as low costs and a simple investment process make them attractive to individuals. But what exactly you invest in is often difficult to understand due to the number of ETFs and the amount of stocks in each fund. That’s why it’s important to choose ETFs that align with your values. Depending on your preferences, there are several options:
- ETFs based on exclusionary stock indices: These ETFs track stock indices that use exclusionary criteria, such as excluding sectors like weapons or fossil fuels. This is the minimum standard for sustainable ETFs.
- ESG (environmental, social & governance): Investments in funds where the impact of ESG practices has been credited to the performance of a financial investment. The focus is on financial rather than ethical indicators, so you’ll often find companies in ESG funds that you might not otherwise classify as sustainable.
- SRI (socially responsible investing): Only companies that have undergone additional screening for social responsibility, such as environmental impact or human rights standards, are included in the equity fund that the ETF tracks. A useful comparison of the different ETFs that track SRI indices can be found here.
- Impact: Investors who are particularly concerned about sustainability can choose specific, actively managed funds that are well known for sustainability, or directly buy stocks of environmentally conscious companies.
On investment platforms or apps like getquin, you can filter for these ETFs with terms like ‘SRI’ and ‘Climate’. A bit of extra research into the funds offered can help you ensure you’re investing in what you believe in.
3. Invest directly into clean energy projects
Looking for more transparency? Try crowdinvesting: on ecoligo.investments, you can invest directly into solar energy projects from just 100 Euros and know exactly where your money is going. Not only can you see the CO2 emissions your investments save, but you can also learn about the business that will benefit from the solar energy – local companies in the world’s fastest growing markets who need your support to go green. It’s a feel-good investment that is much more transparent than investing on the stock exchange – and will earn you a great return, too.
New customers can get a 25 Euro bonus on their first investments – so why wait?
4. Switch to a sustainable bank
The phenomenal sum of 1 trillion Euros is currently kept on German bank accounts – despite low or non-existent interest rates. Which is 1 trillion Euros used by the banks to invest in whatever they see fit; unfortunately often fossil fuels and other activities that most people would not actively support.
Luckily, there are alternatives! If you’re looking for a more traditional bank, GLS Bank and Ethikbank use the capital they manage to invest in projects that support people and the planet. If you prefer your banking to be digital, check out Tomorrow, a mobile-first ethical bank, or treecard, a Mastercard that reforests the planet as you spend.
NB: All links to companies in this article are a selection of what ecoligo employees like to use privately. No commission is earned.
5. Stay up to date on the sustainable market trends
There are some great new products that are about to launch on the market that are dedicated to transforming sustainable investing. Among them are Sagefund, an online wealth manager dedicated to sustainability; Cooler Future, a sustainable fund that will drive returns while fighting climate change; mattrvest, which will connect you to ethically-focused financial advisors and platforms; and Vantik, a debit card that helps you save for retirement, with the money invested in their sustainable fund. Sign up for their waitlists now!
Disclaimer: ecoligo is not a financial advisor, nor is the author of this article. All investments should be made with your discretion and taking the risks of investing into consideration. Investments could result in a loss of capital.
ecoligo connects companies in emerging markets looking to finance their solar energy projects with crowdinvestors who want to fund a greener future. Investment opportunities are available now on www.ecoligo.investments. The platform is currently only available in German but will be opening to EU countries later in the year: sign up here to get on the waitlist.