Sustainable Investing

What is sustainable investing?

This is an approach that covers is a range of practices that seeks financial returns whilst promoting environmental, social and corporate governance values. It involves the consideration of ESG data and metrics when evaluating the sustainability performance of companies. Extra financial factors such as environmental practices (e.g. carbon emissions), relationships with employees and local communities (e.g. inclusion and diversity policies), and how companies are governed (e.g. board composition) are evaluated and considered.      

The Global Sustainable Investment Review 2020 reports that global sustainable funds reached $35.3 trillion at the start of 2020, a 55% increase from 2016-2020. 

What is the difference between sustainable and ethical investing?

The key difference is that ethical investments are chosen according to personal beliefs, or moral principles, and financial return isn’t the primary objective. It focuses on excluding companies that involved in controversial or unethical activities such as gambling or weapons manufacture.  

The terminology when describing sustainable investing can be confusing as terms such as ethical investing, green investing, socially responsible investing and ESG investing can be used interchangeably.        

ebi Sustainability Strategies Infographic

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An easy to understand infographic detailing the core principles of Sustainability Strategies.

Sustainable Investment Strategies

There are a range of sustainable strategies, the largest and fastest growing is ESG (Environmental, Social, Governance) integration. The Global Sustainable Investment Alliance reports that ESG investing accounts for $25.2 trillion in assets under management.

ESG integration

ebi have adopted the ESG integration strategy, integrating ESG screening into an evidence based approach, prioritising diversification, growth and returns whilst addressing ESG issues. The most diversified approach, this method seeks to integrate ESG concerns into a predefined investment strategy.

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Exclusion based

As the name implies, this approach screens a universe of potential investments and seeks to exclude those companies that fail to reach certain minimum criteria in their ESG measurements.

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Impact investing

The most concentrated approach, this style usually takes the form of being goal-driven, for example investments in social housing projects to alleviate homelessness.

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Positive Screening

Here the approach is to identify companies that exceed a pre-determined level in one or more of the ESG categories. Companies that pass the screening criteria are eligible for investment.

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Our Portfolios

ebi has created a range of low-cost, diversified, passively managed portfolios. Our Earth and Core ESG portfolio suites are ESG screened.

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