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Why Is Sustainable Investing Important? 10 Benefits and Reasons for ESG-Investments

Why Is Sustainable Investing Important? The Best Benefits and Reasons for ESG-Investments

Do you want to learn about the advantages of green investments and why you should invest sustainably in the future? Then you've come to the right place! We live in a time of growing awareness of environmental protection and social justice. We are all trying to do our Making everyday life more sustainable.

However, people often forget that banks and companies use the money you have invested in your account or on the stock market for their business. That's why every cent you invest without realizing it can have serious ecological and social consequences. Fortunately, a conscious investment can also have a valuable impact. And ultimately act as a powerful tool to drive positive change.

In this article, I would like to share with you the most important reasons for investing your money sustainably. Simply see them as a constant source of motivation and feel free to share them with people who should also know them. Let's go!

10 advantages: Why should you invest sustainably?

Benefits of sustainable investments for the environment and society

Sustainable investment (often also referred to as ESG investment) extends, so to speak, the The magic triangle of investment (i.e. security, profitability and liquidity) to environmental, social and ethical criteria. 

Before we get to the specific motives and reasons for investing green, you should know that you need a custody account. The Trading platform of your choice will ultimately be the center of your sustainable investments.

The choice is sometimes difficult because the services are totally different. But Finanzradar has compared numerous online brokers and a comprehensive overview which will enable you to make a quick and informed decision if you have not already opened a custody account.

Ready to go? Then we can get together now the advantages of sustainable investment. Use them to make more conscious investment decisions in the future.

1. protect the environment

Man-made environmental problemshow the climate change, the Deforestation of the rainforests or the Plastic waste in the environmentrequire a quick rethink from everyone. By consciously investing sustainably, you are not just making your money work for you, you are also helping to protect our planet.

For example by invest in companies that pursue a green philosophy and on renewable energies consciously reduce CO2 emissions and promote the sustainable use of resources.

Your investment ultimately helpsto mitigate global warming, the Biodiversity and protect natural habitats. In this way, we can also secure our own future (keyword: food safety) and at the same time generate financial returns on the basis of conscious investments.

Why invest sustainably? Because sustainable investments protect the environment and the climate!

Tip: Sustainable investing also reduces the risk of investing in companies that make themselves look greener than they are. How you Recognize greenwashing betterI'll be happy to explain in the linked blog article.

2. living up to social responsibility

Investing with a view to social responsibility means investing your money where it is needed. promotes positive changes in our society.

In your trading activities, make a conscious decision in favor of companies that are committed to fair working conditions, for example, against child labor and exploitation, for inclusion, education and human rights, Advancing social justice and work according to clear, ethical standards.

By investing ethically, Finally, you conclude the investment in critical markets from. These include, among others:

  • Fossil energy sources
  • Weapons industry
  • Alcohol and tobacco industry
  • Pesticides
  • Animal testing
  • Genetic engineering
  • Gambling
  • Pornography

In my opinion, the exclusion of these industries and activities is one of the most important reasons why sustainable investments are worthwhile both for you and for other people.

Why invest sustainably? Because sustainable investment promotes companies that are aware of their social responsibility.

3. profit from growing demand

Ecological, social and ethical standards are fortunately gaining relevance in our society. More and more people are realizing that their money Do good can. The demand for sustainable products is therefore increasing rapidly - also in the area of investments.

More than half of all Germans believes According to a survey by the German Institute for Asset Accumulation and Retirement Provision (DIVA) We are already aware that sustainable investments help to make the entire economy more sustainable.

However, investing sustainably does not mean chasing after some short-lived trend. Rather, in my opinion, it means taking your own Investing money in future-proof and future-oriented companies. In other words, in companies that generate added value for the environment, society and ultimately for yourself.

Why invest sustainably? Because sustainable investments are extremely popular and therefore the potential returns are also growing.

4. minimize risk

The United Nations Sustainable Development Goals at a glance
The 17 global Sustainable Development Goals (SDGs) of the 2030 Agenda © Bundesregierung.de

With the ESG standards the United Nations has created a framework that banks and companies can use as a guide to act more sustainably.

The "E" stands for Environment and includes, for example, climate strategies and the reduction of greenhouse gas emissions, while the "S" Social and includes, for example, occupational safety and supply chain management. The letter "G" stands for Governance (i.e. corporate governance) and relates, among other things, to business ethics and protection against exploitation and corruption.

The ESG criteria are also closely linked to the Sustainable Development Goals (SDGs). With them, for example, the World hunger stoppedgender equality, climate change and the Species extinction decelerated and the Sustainable consumption be promoted.

Since ecological and social developments also influence the economy, companies that act in a future-oriented manner can Drastically reduce economic risks. The sustainable commitment therefore ultimately makes them even more interesting for investment purposes.

Why invest sustainably? Because the financial risk is lower with ESG investments.

5. use easy access

The growing importance of sustainability criteria in our society has also made sustainable trading and conscious investment easier than ever before. This is mainly due to the fact that the term "ESG" has become established as the standard for sustainable investment has.

The best ESG stocks and ESG ETFs can be easily recognized by the fact that the abbreviation of the standard directly in its title is located. In addition, the ESG criteria and Sustainability generally also to the selectable Filter options in the search for interesting investment products. This applies to both online investment platforms and on-site advice at your trusted financial institution.

One valuable advantage of sustainable investing is therefore that it offers investors it is much easier to do something for sustainable development with your own capital.

Why invest sustainably? Because sustainable investment options are becoming easier to find.

6. focus on economic stability and long-term growth

Sustainable companies are not only characterized by Risk minimizationbut also through a Greater innovative strength and Better adaptability in times of crisis off.

For example, while the business model of companies from the fossil fuel sector (e.g. coal-fired power plants) is becoming increasingly irrelevant, adapted and future-oriented companies (e.g. solar companies) are attracting talented employees who can make the Access to innovative and promising markets guarantee. While the former must fear legal regulations, the latter can even benefit from them.

The resulting economic stability and the Focus on long-term growth naturally also makes the companies more attractive for sustainable investments. This is an important reason why sustainable investments are becoming increasingly popular.

Why invest sustainably? Because sustainable companies are often economically more stable and strive for long-term growth.

7. invest in line with your own values

Investing in line with personal values

You are certainly also against child labor and illegal deforestation, cruelty to animals and exploitation, arms trade and corruption, right? Then, of course, you should not invest in the companies that make money from these activities.

Fortunately, sustainable investing offers you the Opportunity to invest your money in line with your personal values. Because you have the power to decide what kind of banks, companies and projects you support with your money.

A Value-oriented investment strategy and the so-called Impact investing enable you to increase your wealth in a way that is not only financially lucrative, but also morally and ethically correct. In this way, you ultimately build a bridge between your financial goals and your desire for a better world.

Why invest sustainably? Because sustainable investments correspond to your personal values.

Tip: In the linked article I also gave you my personal reasons for living vegan for many years. Ecological, social and health motives also played a role in this decision.

8. take advantage of yield opportunities

There are countless Prejudices against sustainable action. A common misconception that unfortunately persistsThe fact is that sustainable investments are only possible at the expense of returns compared to conventional financial products.

Thereby have studies and, of course, long-term market developments (compare, for example, the MSCI World SRI and the MSCI World ESG) have shown that sustainable investments achieve comparable, if not even higher yields than conventional investments. And that even with lower volatility. The comparable return opportunities are once again due, among other things, to the fact that demand for sustainable products and services is growing.

Why invest sustainably? Because the potential returns on sustainable investments are at least as great.

9. improve image and be a role model

This advantage of sustainable investments and trading deals applies to both investors and entrepreneurs. Private or corporate public investments definitely improve your own public image.

In particular, companies that are perceived as sustainable and socially responsible enjoy a high reputation. Higher reputation and trust among consumers, investors and in society. This can improve customer loyalty and market position, for example, and ultimately provide many economic benefits.

In addition, sustainable investments can also encourage many other people to also make conscious investment decisions. Ultimately, however, the sustainable investments and measures should also motivate other managing directors to rethink their business practices and improve their Making companies more environmentally friendly.

Why invest sustainably? Because sustainable investments improve the image of companies and send out a signal.

10. protect children and grandchildren

By taking ecological, social and ethical factors into account in your financial decisions, you promote a world that future generations will also consider worth living in. After all, we all - and you too - have a responsibility to ensure a stable, fair and sustainable society in which our children and grandchildren can grow up safe, secure and healthy.

"I won't live to see it anyway" is a really weak excuse for ignoring environmental and social factors in your investment and only thinking about yourself. Instead of putting your money into critical marketsHowever, you can live up to your responsibility by making conscious investments. Ultimately, you are also laying the foundations for a sustainable world.

Why invest sustainably? Because sustainable investments serve the next generations.

Practical tips: How can you invest sustainably?

Magic Triangle of Sustainability - Investing Money in an Environmentally Friendly Way
The classic "magic triangle of investment" supplemented by sustainable criteria

Now you've learned why conscious investing is so important. But I would like to give you a few more important tips from the sustainable investing from personal experience that you should definitely take to heart:

  • Internalize the ESG criteria: Get to know the Environmental, social and governance criteria familiar. Once you understand them, it will be much easier for you to find truly sustainable companies and investment opportunities that are financially attractive and in line with your personal values.
  • Invest in sustainable funds and ETFsThere are a large number of green funds and ETFs that invest in sustainable companies and projects. They ensure broad diversification and make it much easier for you to get started with sustainable investments.
  • Look out for seals and certificatesBe aware that "sustainable" is not a legally protected term. Therefore, when developing your sustainable investment strategy, you should also keep an eye out for labels such as the FNG seal have. This is the quality standard for sustainable investments, which recognizes the most environmentally and socially responsible funds once a year.
  • Read sustainability reportsThe reports provide information on how seriously companies take their sustainability goals. You can also see the actual progress made in recent financial years. For example, you are less susceptible to Greenwashing to fall in.
  • Stay criticalThe world of sustainable investments is developing rapidly. That's why you should keep a critical eye and continuously and comprehensively inform yourself about your potential trades so that you can always make an informed investment decision.

Why invest sustainably? Because every cent invested consciously has a positive impact

Most of us want to make the world a better place, but don't know how. Conscious, sustainable investing is the answer - and helps you do it, make provisions for your financial future at the same time. Because sustainable investing combines conscious action and attractive returns.

Here today I have presented the most important reasons for sustainable investing. You have understood that every cent you invest can make a real difference. Use this knowledge, for example, to improve your current Questioning investment decisions. And, if necessary, to take a new, more sustainable approach to your finances in the future.

"The best time to plant a tree was 20 years ago. The second best time is now."

Chinese proverb (more at Environmental protection quotes)

Do you have any questions, suggestions or would you like to share your experiences with green investments? Then I look forward to your comment!

Stay sustainable,

Christoph from CareElite - Plastic-free living

PS: Look you with pleasure still something in the Blog for sustainable finance around. There you will learn, for example, why you - in contrast to the general belief Save money with a sustainable lifestyle simply by following your heart.

Coffee box Suggestions for improvement

* Links with asterisks are so-called affiliate links. If you click on it and buy something, you automatically and actively support my work with CareElite.de, because I get a small share of the sales revenue - and of course the product price does not change. Thank you for your support and best regards, Christoph!

Christoph Schulz

Christoph Schulz

I'm Christoph, an environmental scientist and author - and here at CareElite I'm campaigning against plastic waste in the environment, climate change and all the other major environmental problems of our time. Together with other environmentally conscious bloggers, I want to give you tips & tricks for a naturally healthy, sustainable life as well as your personal development.

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