Sustainable investment: making a difference – and an attractive return

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Sustainable investing

Let’s say that you could choose between not knowing what happens with your money, or consciously investing in a better world. The risks and return being equal. The choice would be easy, wouldn’t it? ABN AMRO thinks so, and so do many investors. That’s why we’re organising a special webinar with our partner FMO about impact investment. On Wednesday 12 November, we’ll tell you all about it in 45 minutes. Sign up and discover how you can achieve more with your money.

Even from the purely rational perspective of the hard-nosed professional investor, sustainable choices are sensible choices. Solange Rouschop Solange Rouschop Sustainability Manager ABN AMRO Retail & Private Banking

No compromise on return

To have a meaningful discussion about how you as an investor can contribute to a better world, we first have to dispel a myth. Namely, that by choosing to invest responsibly you would be compromising on return. I often hear people compare sustainable investment to buying organic food in the supermarket. “It’s good for the planet, but bad for your purse.” Sustainable investment, however, doesn’t work that way. It’s no different from traditional investment, and the risk-return ratios are perfectly normal. The only difference is that you’re investing in a better world. So to me, the question is simple: why wouldn’t you want to make a difference, if it will actually earn you money?

Smart companies, prudent investments

Sustainable investors, like any investor, base their decisions on a thorough analysis of companies’ fundamentals. But in addition, they look at how companies score on environmental, social en governance (ESG) criteria. In other words, how do they treat people and the planet? Knowing a company scores well in these areas is valuable extra information, from a purely economic perspective. Indeed, these are companies that actually think about the sustainability risks they face, or the opportunities that sustainability presents. These are companies that are prudently managed, that develop strategies and perform well in the long term. Which makes them attractive investments. So from the perspective of a hard-nosed professional investor, sustainable choices are sensible choices.

Exclusions or sustainable investment

Are you convinced already? Then you have several options open to you to make a difference. A mild, but rather passive option is exclusion. Refraining from investing in companies engaged in arms trade or human rights abuse. An obvious place to start. A more active approach is to look at which companies are best in class, based on both financial and ESG criteria. These industry leaders make excellent building blocks for portfolios.

Next step: impact investment

Taking this a step further brings us to impact investment. This involves assessing companies based not only on their sustainability, but also on the positive impact that their products and services have on the economy and society. For example the carbon emissions reduction they have achieved, the number of people they have lifted out of poverty or the amount of plastic that they have fished out of the ocean. While making a profit, of course. Microfinancing funds are a well-known example. Whatever form you choose, opportunities abound in every sector: from medical to agricultural and from real estate to energy.

Interested? Come to our webinar

At ABN AMRO, in response to the rapidly growing interest we’ve been seeing in sustainable investment, we will be offering a special webinar on Wednesday 12 November from 8.30 to 9.15. p.m. Our partner in this is FMO, a development bank that has been investing profitably and sustainably in emerging markets for forty years.

FMO’s mission is to provide loans to small and medium-sized businesses, and by doing so foster employment and economic growth, while generating an attractive return. In fact, they have been impact investors avant la lettre for nearly half a century. During our online seminar, my colleague Eric Buckens will be speaking with Nanno Kleiterp, CEO of FMO. Providing inspiring examples from actual practice, they will reveal in 45 minutes how you can invest to achieve a positive social impact.

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