Sustainable investing, making a profit with impact

You want to grow your money, but not at any cost. More and more investors feel this way. Sustainable investing is therefore one of the fastest-growing categories in the investment world. But what exactly does it entail, and does it also generate a return?

‍

What is sustainable investing?

In sustainable investing, environmental, social aspects, and good governance play a role in investment decisions. This is often referred to as ESG: Environmental, Social, and Governance. In practice, this means, for example, that you do not invest in fossil fuels or tobacco, or instead choose companies that lead the way in renewable energy or fair working conditions.

‍

There are various strategies. Some funds exclude certain sectors, while others weigh ESG factors in their selection. And then there are impact funds that focus on measurable social results, such as avoided CO2 emissions or access to clean water.

‍

Is sustainable investing really growing that fast?

Yes. Globally, sustainably managed assets amounted to approximately 35 trillion dollars at the end of 2020, an increase of about 15 to 20 per cent compared to two years earlier. In Europe and Canada, more than 40 to 50 per cent of total assets under management now fall under sustainable strategies.

‍

The number of sustainable funds has grown explosively. In 2015, there were several hundred ESG funds worldwide; by 2023, there were thousands. Younger investors especially prefer sustainability: research shows that 60 to 75 per cent of investors between 18 and 35 find ESG important.

‍

Does sustainable investing also generate a return?

This is the question on many people's minds. The short answer: yes. Research by Morningstar and MSCI shows that sustainable funds, on average, do not perform worse than traditional funds. In many cases, sustainable indices perform comparably or even better, especially during market downturns.

‍

The reason? ESG factors can reduce financial risks. Companies with good governance, little environmental damage, and strong social practices are less likely to face scandals, fines, or reputational damage. This makes them more resilient in the long term.

‍

What does sustainable investing cost?

Sustainable ETFs and index funds often have comparable costs to regular funds. The trend is even towards declining costs across the entire ESG category. You do not necessarily pay more for a sustainable choice.

‍

However, it is important to know that not every provider uses the same definitions. What one party calls sustainable, another may consider standard. European regulations such as the SFDR help with this by requiring providers to disclose sustainability information.

‍

Responsible investing at Vive

At Vive, investments are made in market-wide index funds with low costs. The funds in which Vive invests take ESG criteria into account. You therefore combine a proven investment strategy with attention to sustainability, without it meaning you have to pay more.

‍

In the app, you can see exactly what you are investing in and how your wealth is developing. Transparent, accessible, and with an eye on the long term.

‍

Want to start investing for a specific goal? View the options for goal-based investing or read more about pension investing if you want to build up for the long term.

‍