Green Investment Explained: Understand the rise of sustainable investing and how you can participate for both financial and environmental gains.
While historically, investment was primarily measured in percentages of profitability, dividend lines, and growth curves, green investment introduces new concepts: sustainability, eco-responsibility, positive environmental impact, positive social impact, ecological and energy transition, and more. Faced with the consequences of the climate crisis, investors are no longer just scrutinizing their portfolios; they are examining them through the lens of responsibility. They are essentially seeking to reconcile performance with a positive environmental impact. So, to the question of whether it is possible to aim for profitability while reducing one's carbon footprint, the answer is clear: yes, thanks to green investment. But what are we talking about? What are the principles and advantages, and above all, how can one invest sustainably?
While it truly gained prominence after the COP21 in Paris in 2015, green investment is not exactly new. Its predecessor? Sustainable investment, born in the USA in the 1970s, during the Vietnam War. At that time, civil rights activists sought to have a positive impact on society, creating the very first sustainable investment fund, the Pax World Found (1), in 1971 – a platform for investors opposed to the war.
However, the emergence of the founding principles of green investment, or sustainable investment, can be traced back to the 1990s with the first ethical funds (2). Activity grew, and ten years later, at the beginning of 2001, a local initiative in San Francisco continued to pave the way with the issuance of green bonds dedicated to financing solar panels (3). On the other side of the Atlantic, the European Investment Bank took up the challenge of responsible investment in 2007 by also issuing the climate awareness bond: the first green bond of its kind (4). The World Bank followed suit in 2008, marking a new acceleration in the sector's development.
Still, the Paris Agreement in 2015 represents a decisive turning point for sustainable finance. Actors like Al Gore with Generation Investment Management have contributed to the emergence of a new ecological awareness in financial circles. Today, giants such as BlackRock, Amundi ESR, BNP Paribas AM, and Mirova are massively directing their funds towards assets aligned with environmental criteria and the climate objectives of the various COPs that have followed.
Investing in a "green investment" involves putting money into projects, companies, or funds that support the ecological transition and environmental protection. This can include renewable energy production, energy efficiency, sustainable mobility, or carbon finance. The ambition of green finance? To finance a sustainable future while generating economic returns. In short: to combine financial performance and a positive environmental impact.
But between ethical convictions, economic logic, and marketing storytelling, it's a fact: the line between sincere commitment and greenwashing is often blurred, if not very thin.
Because beware of confusion. The landscape of sustainable investment is an archipelago of interconnected notions, terms, and acronyms that are similar but distinct, and often complementary in reality.
This is the case with "SRI" and "ESG." One does not go without the other. SRI (Socially Responsible Investment) applies ESG (Environmental, Social, Governance) criteria to guide investment decisions and allocations. It favors the best performers in each sector. As for ESG, it is an analysis framework rather than a label in itself.
The term "green investment" encompasses a diversity of approaches: combating climate change, preserving biodiversity, energy transition, circular economy, development of renewable energies, water management, sustainable agriculture, etc. It is thus possible to invest in a company whose approach qualifies as "green" through its products, processes, supply chain, or even its customers. This broad spectrum requires investors to thoroughly examine the real intentions behind each financial product.
As an investor, you have a range of possibilities for making a sustainable investment. Bonds, insurance products, real estate investments, banking products... let's take a look.
Contrary to popular belief, green investments do not sacrifice profitability. Some studies show that SRI and climate funds exhibit either comparable performance to traditional investments (7) or even superior performance (8).
But what are the drivers of performance for sustainable investment vehicles?
The growth in demand for clean energy, regulatory pressure, and technological innovation play a key role. Companies that anticipate ESG standards often prove to be more agile and attractive in the long term.
However, caution remains necessary. Some labeled funds have high management fees. The lack of reliable extra-financial data can lead to speculative bubbles. And some "green" startups can fail despite their promises.
In recent years, green finance has become a trendy term. Maybe too trendy... Many offers are adorned with green without any real ecological basis. "Sustainable" funds still finance oil giants; labels are awarded without any requirement for results. This is the drift of greenwashing. It threatens both the credibility of the sector and the trust of savers. To avoid it, you need to learn to read between the lines.
Greenwashing is a trap, but a trap that can be avoided. The challenge: to orient your investment decisions towards truly sustainable vehicles with a real impact on climate.
But how can you avoid falling into the trap of greenwashing? Selection criteria and labels help to distinguish the true from the false, the green from the gray.
ESG criteria evaluate a company's Environmental, Social, and Governance practices. Example: waste management (E), respect for human rights (S), financial transparency (G). But a good ESG score does not equate to a coherent climate strategy. TotalEnergies can obtain a good G score without being a player in decarbonization.
Labels are designed to guide investors in their choices. Several exist.
The EU has built a green taxonomy to classify economic activities considered sustainable. Based on the "Do No Significant Harm" principle, it aims to standardize sustainable finance. A company or fund will soon be able to prove its alignment with this taxonomy.
For an investor concerned about their environmental impact, structuring a portfolio of green investments requires rigor and coherence. First, one must analyze their risk profile, investment horizon, and objectives: financial performance, positive impact, diversification, etc.
Numerous sustainable solutions exist: SRI life insurance, low-carbon ETFs, labeled funds, green bonds, ecological crowdfunding, sustainable SCPIs, or participatory financing in renewable energy projects. One can also invest via a responsible PER (Retirement Savings Plan) or in the shares of companies committed to the energy transition.
Platforms like Goodvest, Homaio, or Lita.co offer high-impact investment products adapted to different investor profiles. These actors integrate ESG criteria into their management while ensuring transparency on performance and ecological impacts. The watchword: combine profitability, purpose, and sustainability.
A green investment involves placing your money in projects or companies that have a positive impact on the environment: renewable energies, sustainable mobility, energy efficiency, resource preservation, etc. It is part of a logic of economic performance and ecological impact.
Green investment directly targets ecological sectors. SRI (Socially Responsible Investment) evaluates companies according to environmental, social, and governance (ESG) criteria.
Yes, numerous studies show that sustainable investments offer comparable, or even superior, long-term performance.
Key sectors include renewable energy (solar, wind), decarbonisation, energy renovation, electric mobility, the circular economy, and sustainable agriculture. The low-carbon building sector is also attracting more and more investors.
In France, the ISR, Greenfin, or Finansol labels provide reliable benchmarks. At the European level, the green taxonomy aims to standardize what can truly be qualified as a sustainable investment.
Yes, thanks to initiatives like Homaio, individuals can buy allowances from the European market (EU ETS) to seize them, preventing polluting companies from using them. This is an innovative way to put pressure on emitters.
Like any investment, there are market risks. It is also important to watch out for greenwashing: some products claim to be "green" without any real impact. Hence the importance of analyzing funds, verifying labels, and seeking guidance.
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