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Is sustainable and ESG investing profitable?

Is sustainable and ESG investing profitable?
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Sustainable investing might still be a niche topic to some, but for those who have already started delving into funds, sustainable investing makes sense. In fact, we’ve covered why you should consider ESG and sustainable investing in another post. 

While often referred to under the banner of ESG (environmental, social and governance) investing, sustainable investing makes us more socially conscious about where our money goes.

Where investors once simply threw money at the best-performing funds with no regard to how that money was made, many now want to make a difference through sustainable and ESG funds. And doing so doesn’t have to mean a drop in profits. 

What the experts say 

Sustainable investing might not be a topic of conversation around the dinner table just yet. However, that doesn’t mean that it plays second fiddle to other types of investing. 

Adrian Lowcock, head of personal investing at Willis Owen, says, “These funds are core holdings now. Whereas previously, ESG was a secondary consideration, a nice-to-have tilt to portfolios, the world has been changing. A focus on companies which do less harm to the environment, be that alternative energy, greener food production or waste reduction, are here to stay, and crucially, they are being rewarded by investors.”

Socially conscious or not, the financial incentive of choosing the right portfolio of ESG investments has the potential to generate a decent return. With the pressure companies face to become more socially responsible, it’s very possible that ESG and sustainable investing will become the new normal.  

How to get started in sustainable investing 

There are different categories of sustainable investing that will help define your search for the ideal stock portfolio. For instance, if you’re looking to alleviate the drain on natural resources, you may want to consider stocks that include the likes of green fuels and hemp production. 

You can start your own ethical portfolio by opting for funds that meet your criteria. This can, however, be time-consuming and may only expose you to a small selection of funds. 

Working through a boutique broker that specialises in sustainable investing might be easier. Find one who already has a pre-selected basket of funds in the categories you like. Just keep an eye on the fees to ensure they don’t eat away at your gains. 

Banks and large brokerage firms also offer investors opportunities to expand their portfolios with a variety of ESG and sustainable investments. The upside is that these institutions tend to have a bigger asset portfolio at a lower cost. This translates into lower fees and commissions for you as an investor. 

Platforms that offer ESG and sustainable investing in the UK

The Principles of Responsible Investing (PRI) are a set of guidelines for brokers and investment firms. It steers them towards ethical and ESG investing. Investors looking to find investments managers and brokers that have signed this accord can download the list to find their perfect fit. 

There are also some well-known brokers and financial institutions that offer ESG investments: 

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