What is sustainable investment and why is it important?

Sustainable investment, also known as socially responsible investment (SRI), is an investment approach that considers environmental, social, and governance (ESG) factors in addition to financial factors. The goal of sustainable investment is to generate positive social and environmental impact alongside financial returns.

Sustainable investment is important because it recognizes that businesses have a responsibility to address ESG issues and that investors can influence positive change through their investment decisions. By considering ESG factors in investment decisions, investors can support companies that are committed to sustainable business practices and drive positive impact.

Moreover, sustainable investment can also help mitigate risks associated with companies that do not have strong ESG practices. By avoiding companies with poor ESG performance, investors can potentially reduce their exposure to risks such as reputation damage, regulatory fines, and environmental liabilities.