Five ways to invest sustainably
Sustainable investments are becoming increasingly popular – also because they can create up to 27 times more positive impact than other environmentally conscious measures! This Earth Day (“Earthy Day”), we want to raise awareness of sustainable investment opportunities and show you how you can do something good for the planet with a few simple steps.
1. no longer invest in fossil fuels
In recent years, due to climate concerns and increased risk from a foreseeable decline in demand in coming years, a movement has formed to end fossil fuel investments. Yet investment in these resources is still widespread. While you probably don’t invest directly in coal and oil stocks, the funds, bonds or life insurance policies you’re invested in might – even those that meet ESG (environmental, social and governance) criteria. A simple and effective measure is to review your existing investments to ensure you are not unknowingly supporting 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 individual investors’ investment strategy. Low cost and a simple investment process make them attractive to individuals. But what exactly you’re investing in is often difficult to track due to the number of ETFs and the amount of stocks in each fund. Therefore, it is important that you select ETFs that are consistent with your values. Depending on your preferences, there are several options:
- ETFs based on exclusionary stock indices: These ETFs track stock indices that use exclusion criteria, e.g. the exclusion of sectors such as 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 counted towards the performance of a cash 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 been additionally assessed for their social responsibility, e.g. with regard to their environmental impact or human rights standards, are included in the equity fund that the ETF tracks. A useful comparison of the various ETFs that track SRI indices can be found here.
- Impact: Investors who are particularly concerned about sustainability can choose special, actively managed funds that are known for sustainability or invest directly in shares of environmentally conscious companies.
On investment platforms or apps like getquin, you can filter for these ETFs using terms like “SRI” and “climate.” With a little additional research on the funds offered, you can ensure that you are investing according to your values.
3. finance clean energy projects
You want more transparency?
Try crowdinvesting: With ecoligo, you can invest directly in solar energy projects for as little as 100 euros and know exactly where your money is going. You can find out exactly how muchCO2 is saved by your investment and learn in detail about the companies that benefit from solar energy. It’s an investment that lets you make good things happen in the world while investing your money profitably.
New customers can get a €25 bonus on their first investment with the code NEU25 – so why wait?
4. switch to a sustainable bank
The impressive sum of 1 trillion euros is currently sitting in German bank accounts – despite low or non-existent interest rates. That’s 1 trillion euros, much of which is invested by banks; unfortunately, often in fossil fuels and other areas that most people would not actively support.
Fortunately, there are alternatives! If you are looking for a more traditional bank, GLS Bankand Ethikbank are good choices. If you prefer to do your banking digitally, Tomorrow, an ethical bank that relies entirely on mobile banking, and treecard, a Mastercard that scavenges the planet as you spend money, are recommended.
All links to companies in this article are a selection of what ecoligo employees like to use privately. No commission is earned.
5. keep up to date on sustainable trends in the market
There are some great new products about to launch that are looking to revolutionize sustainable investing. These include Sagefund, an online wealth manager focused on sustainability; mattrvest, which connects you with ethically minded financial advisors and platforms; and Vantik, a debit card that helps you save for retirement by investing in sustainable ETFs-. Sign up for their waiting lists now!
Disclaimer: ecoligo and the author of this article are not financial advisors. All investments should be made on a discretionary basis, taking into account the risks involved in making an investment. Investments may result in a loss of the capital invested.
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