Sustainable finance: an option for today's investors today
Beyond economic performance, sustainable finance aims to limit the impact of investments on society and the environment. This concept encompasses a wide variety of practices that correspond to current environmental and social issues. Responsible funds can be dedicated to the climate, recycling, energy transition, the fight against inequalities, etc.
That’is responsible finance ?
The savers know above all the sustainable finance through SRI (socially responsible investment) funds. This type of investment seeks to reconcile financial performance and positive impact on the environment and society. To achieve this, portfolio managers exclusively finance companies or public bodies involved in sustainable development.
SRI allows us to promote the development of a a more responsible economy by influencing the behavior and governance of the operators concerned. The preferred themes vary from one country to another. France, for example, often opts for the social, while the UK prioritizes governance and the US focuses on ethics.
Nevertheless, socially responsible funds are generally defined by their compliance with ESG (environmental, social and governance) criteria. These are decisive in the selection or exclusion process of projects to be financed. Besides SRI, sustainable investment also includes solidarity finance and crowdfunding.
At solidarity economy, the positive social footprint is often prioritized over financial performance. The projects also have a notable social utility, such as the creation of social housing, the fight against poverty, etc. Finally, crowdfunding is also part of responsible finance, as it allows to support socially useful projects.
This system is declined in donation, loan and investment.
Why is it called green finance? ?
The sustainable finance is called " green "This is where responsible investing supports the environment energy transition and the fight against climate change. Savers and institutional investors play a decisive role in the economy. However, asset managers most often direct capital towards profitable projects, without taking into account their social and environmental impacts.
Conversely, green finance only supports companies that do not contribute to global warming or promote the ecological transition. It contains various financial products such as green bonds, the green assets or the carbon market. The former are debt securities representing funds invested in green projects.
The carbon market, for its part, allows economic operators and governments toexchange their rights to pollute. In concrete terms, international regulations have established GHG (greenhouse gas) emission caps to reduce pollution. However, countries or companies can purchase the remaining rights to use a particular product or service’Other actors who have a certain margin in this area.
The ecotag also represents an instrument that promotes the green economy. This bonus-malus grid increases the purchase price of polluting vehicles and reduces the cost of responsible cars. The formula has proven to be effective on consumers, such as tax benefits on work that improves the energy efficiency of housing.
Why do sustainable finance ?
The sustainable finance Above all, it allows them to to give meaning to investments for savers and businesses. In this way, investors can both grow their money and play a responsible role in the economy. This choice also makes it possible to limit the risks of financial underperformance of their assets.
Indeed, SRI significantly reduces the potential ESG problems of companies.
On the other hand, responsible finance represents an element of concrete response to today's societal and climate issuess. It also strives tosupport the most promising projects, for the environment and the community. It's a socially responsible way to help solve real-world problems on a local or global scale.
To become a responsible investor, the simplest technique is to subscribe to savings products containing labeled funds (life insurance, mutual funds, UCITS). Several labels allow to identify ethical investments, such as SRI certifications, Finansol, GreenFin, etc. It is also possible to find out which companies are certified on the website of these certification bodies.
Today, sustainable real estate is particularly popular on the crowdfunding sites and in responsible investing in general. These platforms often feature real estate projects with high environmental performance. Subscribers can also find promoters with ethical and sustainable commitments.
Thus, these investments are now more accessible.
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