WHAT ARE SUSTAINABLE STOCKS?
Sustainable Stocks is an initiative by the non-profit Sustainable Investing Group in Denver, Colorado, to create “a new measurement of corporate sustainability performance that goes beyond the short term and provides investors and corporate managers with a more complete picture of the financial risks and rewards of taking a principled stand towards social, environmental and economic responsibility”. The group defines the Sustainable Stocks 60 (S&P-like) index as “an equity index that measures the performance of sustainable stocks selected for positive environmental and social performance records as well as a strong balance sheet. The index further accounts for sustainability focused M&A transactions, plus revenue generation by clean tech companies”.
What is Sustainable Investing?
According to the website of the Sustainable Investing Group, sustainable investing can mean different things. The first type occurs within a mutual fund or some other type of portfolio that is set up to meet the ethical standards of responsible investing - these funds are usually labeled as Socially Responsible Investing (SRI). SRI funds try to get around the problems of fossil fuel investments, climate change, environmental degradation and climate change by limiting or even avoiding certain companies or industries that contribute the most to these issues. An example is choosing not to invest in fossil fuel companies or companies involved in mining and/or deforestation.
The second type of Sustainable Investing involves a shift away from investing purely in shares and instead investing in other types of financial instruments like bonds or securitized products. This type of investment can offer increased liquidity as well as potentially higher returns due to the lack of low cost pension management in funding these programs. These instruments are at present heavily underpriced relative to other long term investments and may offer great opportunities for investors looking to give their portfolio more breathing space and chances of higher returns while at the same time reforming capital markets for the sustainability generation.