Intelligent CIO APAC Issue 22 - Page 37

TALKING

‘‘ business

While the concept of sustainable investing has been around for quite some time , for many , it has taken a long time for the penny to drop . However , today more and more investors are seeking to invest sustainably . At the same time , more and more businesses are realizing the importance of prioritizing the sustainability agenda in their strategies and operations .

What is sustainable investing ?
What are we talking about ? Sustainable investing is an investment discipline that considers environmental , social and corporate governance ( ESG ) criteria to generate long-term competitive financial returns and positive societal impact .
Various other terms are often used such as responsible investing , impact investing or ethical investing – while there are nuanced differences , it ’ s fair to say that the commonality is to achieve positive change , invariably with a social or environmental dimension .
However , sustainable investing isn ’ t just about avoiding investing in companies that do harm . There is a new class of investors actively seeking out companies that address daunting social and environmental challenges while also delivering financial returns .
These companies fall into a wide range of industries and sectors – ranging from food to transportation , from healthcare to education – the universe for sustainable investors is extensive .
Sustainable investing is smart investing
The momentum behind sustainable investing has been slowly gathering over the last couple of years . In fact , 2022 may well be the year that sustainable investing comes of age .
With the world still reeling from COVID-19 and the climate crisis becoming increasingly apparent , people are thinking about the impact of their investment decisions – on society , on the environment and on the communities in which we live . But sustainable investing is no longer seen as a nice-to-have .
Sustainable investing is now seen as smart investing – to build the kind of future that we want for people and our planet . Historically , one of the challenges we faced was the lack of data to demonstrate and support the argument that investing sustainably does not result in lower financial returns .
However , the good news is that this has changed – now we have more and more concrete evidence on how sustainable funds outperform the wider market , countering claims that sustainable investment comes at the expense of performance .
The same can be said for companies that understand the role that sustainability plays in their business models , and increasingly leverage this to gain competitive advantage .
It ’ s a growing market
As this evidence has grown so too has momentum – with more investors claiming sustainable investing is the future and fund companies launching sustainable funds at a record pace . A pivotal moment happened in early 2020 , when investment heavyweight Larry Fink famously stated that Blackrock would put sustainability at the center of its investment strategy .
Most big investors now believe sustainable investing is good risk management , leveraging the practice to help manage risk in uncertain times . The challenges of 2020 and 2021 have been somewhat of a game changer in this regard .
Jessica Robinson , CEO of the Association for Responsible Investment in Asia and a leader in the Global Sustainable Investment Alliance
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