Environment, Social and Governance (ESG) has grown in recent years from niche to mainstream, and is now a key investment trend.
From finding ways to tackle climate change to supporting equal rights and other causes, many companies are committed to creating a better world - in addition to growing profits.
By choosing sustainable funds, you can help these companies and whole societies to develop, innovate and grow.
With sustainable and responsible investing you're not just investing in your own future, but in positive change and progress. Your money is aligned with companies that are making a real difference. Sustainable investing also recognises that the companies trying to solve the world’s biggest challenges are well positioned to offer long-term returns.
You can invest with a conscience and make a profit at the same time.
Sustainable investing strategies incorporating ESG now account for over a quarter of professionally managed assets globally. And companies that create value not just for shareholders but also for society and the environment, are well placed to succeed in the long term.
Environmental and societal issues can have an impact on share prices, so bearing this in mind could help:
Remember, all investments rise and fall. And sustainable investment should be seen as a medium to long-term commitment, meaning you should be prepared to invest for at least 5 years.
There are different types of sustainable investing ideas using different terms and methodologies. These include:
While they are similar, there are some differences in the way they work.
Here are some of the main approaches and what they involve.
Ethical investing aims to avoid companies or industries that might have a negative impact on society and the environment. This is called negative screening. Sectors like tobacco, animal testing, gambling, and oil and gas are typically excluded.
Environmental, social and governance (ESG) investing selects companies that meet specific requirements. It's less restrictive than ethical investing as it considers companies that are adapting, such as oil companies that invest in clean energy.
Impact investing selects companies whose positive impact on the world can be measured. For example, those who generate a specific amount of recycling or save a certain amount of water.
HSBC uses the ESG framework to measure the level at which a company is tackling environmental, social and governance issues.
We have an ambitious plan to prioritise financing and investments that support the transition to a net zero global economy. This involves providing sustainable finance; pioneering financing for climate solutions and innovation; and becoming a net zero bank by 2030 or sooner.
If you're considering sustainable investing, take a look at the following products with ESG themes:
To invest with us, you need to have an HSBC Investment Account. Eligibility criteria and charges apply.