Giving meaning to your savings, funding companies dedicated to combating global warming, investing for retirement and for future generations… There are many ethical reasons for choosing Socially Responsible Investment (SRI). However, there are generic reasons as well. Indeed, these investments allow you to balance the level of risk with the prospects for profitability based on a variety of investment instruments. Three experts decipher the SRI investment during our next En Plateau Avec meeting. An event that can be followed live on our website on Tuesday, July 5 at 18:00.
There are many solutions to align your investment goals with your beliefs about a sustainable economic transition. The vast majority of investments, listed (such as index funds) and unlisted (such as real estate), are now available in products that exclusively fund responsible projects and companies.
Each management company chooses a guiding principle for their determination. For some, these are projects and companies engaged in concrete actions in favor of good governance. Their goal is to reduce the negative impact of their activities on the environment and society. Other insurers and asset managers decide to select only the most successful companies and projects for their investments.
Several labels serve as a benchmark for responsible investors
Regardless of the philosophy applied, all responsible financiers rule out questionable activities (such as gun sales and adult entertainment). They evaluate the “non-financial performance” of projects and companies before examining their financial performance. Non-financial criteria relate to environment, social issues and governance (hence the term “ESG criteria” that professionals often refer to). They are evaluated by independent rating organizations, as well as financial criteria.
Companies can also request that their environmental (Greenfin label), social (Finansol label) and governance action plans be labelled. Since 2016, the SRI label (revised by the Ministry of Economy) identifies companies that are most committed to the three ESG criteria. Based on the collected data, each management company may prefer (or not) one of the three criteria in its analysis method. This personalized grid is public and contributors have access to it prior to any investment. Thus, each investor can choose an investment product that is relevant to the issues that matter to him (health, climate, etc.) and tailored to his legacy goals and his investor profile.
Healthcare, transportation, energy… SRI includes many investments and topics.
The investment offer of SRI (Socially Responsible Investment) has evolved over the past twenty years and, in particular, after the signing of the Paris Agreements (December 12, 2015, within the framework of COP21). This marked the commitment of 196 countries to reduce their greenhouse gas emissions (compared to their level in 1990) to save the climate.
Opportunities for innovation and growth for companies remain significant in many sectors. For example, in transport, annual CO² emissions will be displayed in 2021 at the same level as 30 years ago. The European goal is to reduce them by 40% within 30 years (2050) through investments in hydrogen or vehicle electrification. Economists can encourage the transition to energy in the transport sector by investing in funds designed to address this problem. Others choose to invest in health, protecting the oceans, or even accessing education and spreading knowledge around the world. However, it is also possible to focus on investments in growth companies across all ESG criteria (environmental, social and governance) instead of a specific thematic selection.
Risk, return, investment horizon: responsible investing means investing first
Like other investments, responsible investment products come in different levels. The risk of capital loss can be low for conservative investors or higher for more aggressive investors with a long-term investment horizon to smooth out fluctuations in the financial market over time.
Similarly, the return forecast can be reasonable or more ambitious, depending on the degree of risk taken. Thus, SRI investments, like others, must be chosen within a specific legacy strategy. In addition, investors are advised to always take a close look at the product descriptive prospectus.
To help you select the most appropriate investment for your personal situation and your wealth goals, Sidonie Vatrigant and three of her guests will explore the possibilities of SRI during our next En Plateau Avec event.
Appointment to follow on our website at Tuesday, July 5, from 18:00 to 18:30. For more information and to add this event to your agenda: click here