The Sustainability MegaTrend Is Underway

You have heard about sustainability with increasing frequency when it comes to almost every sector in the marketplace today – sustainable clothing, food, energy, resources, etc. This month, we’ll feature four of the biggest and most influential sectors that fall under sustainability: Agriculture, Transportation, Energy, Technology.

So, what is sustainable investing? Here’s how Blackrock, one of the largest financial institutions in the world and one of the financial world’s biggest proponents of ESG investing (environmental, social, governance), defines sustainable investing:

Sustainable investing is about investing in progress and recognizing that companies solving the world’s biggest challenges can be best positioned to grow. It is about pioneering better ways of doing business, and creating the momentum to encourage more and more people to opt into the future we’re working to create.

Also, bear in mind that Blackrock isn’t some fuzzy-headed, do-gooder group. When the US government needed someone to buy and manage the multi-trillion portfolio of mortgages and related financial instruments used to stimulate the pandemic-stricken economy in 2020, it chose Blackrock.

Today, there are a number of sustainability indexes out there. These are just a handful of Dow Jones Sustainability Indexes.

 

Source: Pirelli

 

What’s Sustainable Investing About?

The heart of the matter is what’s at the core of sustainability investing. Here are the factors that go into developing a matrix to determine the sustainability of a company.

 

Source: AIChE

 

This basic spider web design is used in a variety of different sectors to measure sustainability, but the broader goal is for organizations to be more thoughtful about how and what they build.

For example, if you’re building screwdrivers, you don’t just buy the cheapest materials, pay the lowest possible wages, and once your product leaves the factory, forget about it – it’s now someone else’s problem.

With sustainable investing, you’d think about where you’re sourcing materials, where to place a factory and find the smallest footprint, pay workers decent wages, and think about packaging and product materials that can be recycled or that aren’t cheap and disposable. For older generations, this is a more challenging concept, especially in the US where cheap, available goods have almost become a right of citizenship.

The most ironic aspect of this transition to sustainability is the fact that it’s the market driving it, not some social movement. The biggest players on Wall Street and in the global financial centers of the world are embracing this, and that means institutional and professional money is already in place and growing. I’m here to help you get involved and not only grow your investing smarts, but your wealth as well.

More to come, so keep a lookout in your inbox every Thursday!

 

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