Climate change, citizen expectations, and the responsibility of states and companies regarding sustainability are all factors that have contributed to building sustainable finance. Structured around environmental, social, and governance considerations – the famous ESG criteria – sustainable finance rightly aims to positively impact our societies.
Sustainable Finance: For a More Virtuous Economy and Society
Yes, sustainable finance is fundamentally beneficial for society, for the preservation of resources and the climate. In this respect, it differs from traditional finance through its long-term vision, seeking to align returns with the energy and ecological transition.
A true paradigm shift has been underway since its emergence some forty years ago. Continuous initiatives have been necessary to provide it with the legislative and legal framework that investors and investment actors need to guide their allocations. The regulatory framework for sustainable finance, or green investment, has thus been structured around major initiatives such as the 2015 Paris Agreements or, more recently, the European Green Deal in 2021. The European Union, in particular, plays a leading role with the implementation of the green taxonomy in 2021, a strict classification of truly sustainable economic activities. Objectives: to avoid window-dressing and direct capital towards the ecological transition. This standardization is a turning point as it lends credibility to responsible investments and creates a common language for market participants.
The Real Impact of Sustainable Finance on the Environment and Society
Sustainable finance investment vehicles seek the highest returns but simultaneously aim to inherently drive positive changes for society and the climate.
Reducing Carbon Emissions: A Concrete Impact of Sustainable Finance
Sustainable finance has already contributed to the reduction of millions of tons of CO₂, illustrating its role in climate protection.
An example?
In May 2022, the European Investment Bank (EIB) and PT Mass Rapid Transit Jakarta (MRT Jakarta) signed a memorandum of understanding to support the sustainable urban development of Jakarta. The goal is to promote green and sustainable public transport to reduce greenhouse gas emissions by 41% over the decade, in line with Indonesia's climate goals.
In Chile, the Canadian company Innergex issued green bonds amounting to CAD 912.6 million to refinance its portfolio of assets in Chile, including several solar power plants.
In Europe, in Berlin, Berlin Hyp, a bank specializing in commercial real estate financing, launched the first "Green Pfandbrief" (green covered bond) in 2015 to refinance loans for buildings meeting high energy efficiency standards.
The European Union's carbon market, meanwhile, encourages industries to reduce their emissions under the threat of financial penalties.
A More Virtuous and Job-Creating Economy
By redirecting financial flows towards green investment vehicles, sustainable finance stimulates innovation and simultaneously supports the ecological transition: recyclable batteries, input-free agriculture, green hydrogen, etc. It also contributes to job creation and encourages better corporate governance. Good news: a study shows that green finance will help create more than 20 million jobs by 2030.
The Opportunities and Advantages of Investing in Sustainable Finance
An Increasingly Wide Range of Products
SRI (Socially Responsible Investment) labeled real estate funds, green bonds, green ETFs, green private equity, social shares of solidarity-based companies: investors now have access to a diverse range of products and vehicles. Fintechs like Homaio also allow individuals to buy CO2 emission allowances.
Sustainable Finance is Profitable!
In addition to serving laudable goals, these vehicles show returns that are either identical to traditional financial products or even higher. Moreover, sustainable investment is often perceived as less risky in the long term. Companies that have integrated ESG criteria into their approach show a better ability to adapt to crises, stronger governance, and, sometimes, superior returns. The BlackRock study (2020) indicates that ESG factors positively influence financial performance (8).
Sustainable Finance Shapes the Future of Our Economies and Societies
Beyond the pursuit of performance, sustainable finance promotes economic resilience. It supports future-oriented projects (green infrastructure, clean technologies), reduces inequalities, and strengthens the brand image of investors. It also allows for better anticipation of systemic risks: climate crises, social scandals, governance failures.
Investing sustainably also means actively participating in the financing of the energy and ecological transition, the development of social innovations, and the preservation of biodiversity. It means supporting an economy that, rather than depleting resources, preserves or even regenerates them.
How to Get Started in Sustainable Finance
Before investing, it is essential to assess your risk profile, investment horizon, and preferences: climate, biodiversity, health, education, etc. An investor seeking quick returns will not choose the same products as a saver committed for 15 years.
The informed investor will consult impact reports, verify official labels, and be supported by advisors specializing in sustainable finance. Many platforms now offer accessible ESG rating tools.
Turning to Innovative Platforms
Fintechs like Goodvest, Lita.co, or Homaio offer simple, transparent solutions that are often less expensive than traditional institutions. They allow for precise traceability of investments and a more direct relationship with the financed projects.
Investing in sustainable finance is no longer a niche choice: it is the future of asset management. At the intersection of performance and purpose, it redefines the rules of the game. Far from the clichés of cold capitalism, it embodies finance serving the common good. The rise of fintechs, European regulations, and the growing appetite of savers promise an acceleration in the years to come.
FAQ – Understanding and Investing in Sustainable Finance
1. What exactly is sustainable finance?
Sustainable finance refers to all investment practices that integrate environmental, social, and governance (ESG) criteria into the assessment of assets. It combines financial performance with a positive impact on society and the planet, notably through financing the ecological transition and virtuous companies.
2. What are the main sustainable financial products available today?
Investors can turn to several vehicles:
- SRI (Socially Responsible Investment) funds,
- Green bonds,
- Solidarity or impact funds,
- Specialized fintechs that offer simplified access to these investments, such as Homaio or Lita.co.
3. Is sustainable finance really profitable?
Yes, studies show that ESG funds offer comparable, or even superior, performance to traditional funds in the long term. Moreover, they are often more resilient in times of crisis because sustainable companies are better prepared for systemic, regulatory, or climate risks.
4. How can an investor concretely get started in sustainable finance?
Start by defining your objectives: what level of risk are you willing to accept? Which sectors are important to you (renewable energies, health, education, etc.)? Then, select labeled products, carefully read extra-financial reports, and seek guidance from a wealth management advisor or use a specialized platform. The key is to invest consciously, without sacrificing either profitability or impact.
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