The concept of sustainability is becoming a core issue for every sector, organisation, and individual. In Australia, 90% of consumers are familiar with or at least aware of what sustainability is, and many of them say that the sustainable actions of a brand impact their purchasing decisions.
In the US, most consumers will only purchase products that are produced sustainably. However, investors are concerned around the world because they recognise that businesses that are sustainable benefit from brand loyalty and consumer advocacy in the long run.
Therefore, they have begun to follow trends in sustainability and invest in companies that operate sustainably and ethical.
Let’s look at how this relatively new movement towards sustainability is affecting investors and the stock market.
What is Ethical Investing?
Ethical investing is a trend that is on the rise in developed markets across the globe. Investors are no longer solely focusing on short-term profits and have begun to take an interest in their investments’ social and environmental impacts.
With this interest, there has been a rise in both awareness and concern about the environmental, social, and governance (ESG) impacts of their investments.
Awareness of ESG issues:
In terms of ESG issues, a survey has shown that 48% of individual investors around the world are not only aware of ESG issues but are interested in purchasing sustainable investing funds. With the increase in awareness, investors are starting to pay more attention to the complexity of ethical investing.
Why Is Ethical Investing On The Rise?
There are a few reasons why ethical investing continues to be on the rise.
Reason #1:
- Investors are becoming more knowledgeable about sustainable investing. This is due to the development of tools that allow investors to easily analyse and compare companies based on their ESG factors.
Reason #2:
- Another is that investors are becoming more interested in ethical investing since ethical investing has been seen to increase total returns and decrease volatility. Although these are the positives, investors are still interested in the benefits of ethical investing beyond the financial aspect.
Reason #3:
- Although ethical investing can increase financial returns, the fact is that ethical investors care are proving to care about more than just that. The main reason for investing in sustainable companies is the social and environmental impact of their investments.
This means that investors are looking for companies that have positive impacts on society and the environment. To be considered a sustainable company, a company’s management needs to have the commitment, will, and ability to manage sustainability challenges and processes.
Do You Want To Be An Ethical Investor?
With more people advocating for ethical investing, the world may eventually witness a significant change in the environment and society for good. As long as you work with the right ethical financial adviser, you can positively impact the world, advancing us one step closer to achieving all our environmental goals.
What do you say? Make the switch today to Novo Wealth!
We are the ethical financial advice specialist for professionals and business owners who want to invest responsibly, specialising in transitioning our clients from working life into retirement.
Book a FREE chat with our team today!
