SRI vs ESG: Where does ecoligo’s crowdinvesting model stand?
We have all heard terms like community investing, ethical investing, green investing, and impact investing buzzing around. While there are key differences between each approach, each works towards the same idea – make capital allocation decisions based on responsible strategies and improve the state of the world.
Here at ecoligo, private investors, known as crowdinvestors, invest directly in solar projects to provide the capital we need to realize our solar solutions. Crowdinvesting is one type of sustainable investment opportunity but it is worth understanding where this model stands in the overall sustainable investing landscape.
Let’s dive into two of the most common types of sustainable investing, to spotlight differences and similarities, and see where ecoligo stands.
Types of Sustainable Investing
When making a sustainable investment, investors aim to allocate capital to sources with a beneficial financial return, that at the same time contribute to a set of goals that best represent their personal values and interests.
Sustainable investors are individuals, companies, institutions such as universities, foundations, or non-profit organizations among others. There might be endless sustainable investment opportunities for them out there, but all fall under two main categories.
Socially Responsible Investing (SRI)
This type of investing involves either excluding investments in businesses that conflict with investors’ values, or the opposite, investing in companies or organizations with a good social value.
Socially responsible investments can exclude for example investments in companies that produce or sell addictive substances such as alcohol and tobacco, or companies that produce weapons or work in gambling, in favor of companies that are engaged in social justice, human rights, environmental sustainability, and alternative energy/clean technology efforts. At the same time, investment in industries such as coal mining is prevented.
In more recent years, socially responsible investing has been more prominent in companies with an environmental mission and clean energy solutions, rather than solely concentrating on exclusion lists.
Environmental, Social and Corporate Governance Investing (ESG)
Similar to Socially Responsible Investing (SRI), ESG investing takes place after investors consider a set of parameters before deciding where to allocate capital. While there are multiples types of ESG investing available, here we provide an overview of the main components of this type of investing.
Environmental, social, and corporate governance factors frame investors’ decisions. To make sure that a company, fund, or organization is worth their investment, they carefully analyze their impact in the following three categories.
Environmental Impact: Investors’ evaluation entails all available data regarding the impact of a company on the planet. Which is their carbon footprint? Do they take enough initiative to tackle the climate crisis and meet the global climate goals? How about their overall energy efficiency and use of natural resources?
Social Impact: Here is where investors analyze the specifics of the relationship of a company or organization with their employees, customers, and their overall community. How diverse and inclusive are they? Do they pay close attention to protecting their customer data and privacy? How about their overall company ethics and stance on human and employee rights?
Governance: Finally, crucial to choosing where to invest is knowing who is running a company. Who are the people behind the brand? What is their board composition? How about their shareholder rights and relationships with regulators?
Upon the analysis of all this data, investors are more likely to allocate capital where it truly matters. This way they increase the chances of receiving both a fair interest back on their investment and contributing to a positive change in the world.
Taking all the aforementioned information into account, it is worth understanding where ecoligo’s investment model stands within the overall sustainable investing universe, as our solar-as-a-service model is realized through crowdinvesting.
ecoligo’s sustainable crowdinvesting model
The main difference between ESG and SRI investing, compared to ecoligo’s crowdinvesting model, is the direct and immediate climate impact that is generated by investments in ecoligo’s renewable energy projects. With ESG investing, the majority of funds are comprised of stocks. In this model, investors put funds into a company’s overall activities, of which sustainable business practices or activities may only be a portion. As a result, these investments do not have an immediate and direct impact on CO2 savings.
On the other hand, through the projects available on ecoligo’s platform, investors drive the most direct impact one can have in supporting climate action.
Every € invested translates directly to CO2 savings through the fast implementation of renewable energy projects that reduce dependence on fossil fuels. With a transparent process throughout every step of a project, investors can see their impact in action.
With over 100 projects under our belt and many more to come, we have a proven track record of quickly realizing solar solutions for businesses around the globe, all made possible by our crowdinvestors. A mission paved by crowdinvesting, that brings us together with our partners and clients in reducing energy costs and saving the planet with solar.
With this powerful and democratic approach to investing, we offer continuous opportunities for investors and businesses to create a positive impact in the world.
This is where crowdinvesting meets sustainability in ecoligo. With our crowd investing in sustainable solar solutions, we directly address and support The United Nations Sustainable Development Goals (SDGs).
The SDGs emerged from the most inclusive and comprehensive negotiations in UN history and have inspired people from across sectors, geographies, and cultures. Achieving the goals by 2030 will require heroic and imaginative effort, determination to learn about what works, and agility to adapt to new information and changing trends.
All ecoligo solar projects achieve at least two of the set SDG goals, in particular SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). At the same time, for a series of projects, we are fulfilling additional goals such as SDG 3 (Health and Well-being) and SDG 8 (Decent Work and Economic Growth).
Together with crowdinvestors, clients, and partners, ecoligo’s sustainable crowdinvesting model proves that, with the power of the crowd, we can build a better world for us and the generations to come. With capital invested in solar solutions that reduce energy costs and support the growth of businesses in emerging markets, our model incorporates elements of SRI and ESG investing, as analyzed earlier.
We take great care in carefully selecting the projects launched on our platform, the people behind the companies in need of a solar solution, the overall company activities, ethics, and goals. This way we make sure that our crowdinvestors allocate capital in solutions that matter, for companies targeted towards environmental and social sustainability.
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