Sustainable investing is a relatively new concept across the world, and newer still in India. As an investment option for women or men, it is a seamless fit if you are someone who is aware of the challenges that our environment is facing and are constantly looking to help people, associations and conglomerates who are doing their bit to restrict or undo the damage. If you identify with this cause, sustainable investment is the right investment option for women like you.
What is sustainable investment?
In the simplest terms, sustainable investment is investing in companies that are ensuring that their processes and everyday operations don’t harm the environment. It also amounts to investing in companies that are doing their bit to ensure that no harm is caused to the environment, such as working on solutions that undo damage, by providing sustainable, alternative solutions.
So, for example, if you were to invest in green funds that in turn invest in companies that develop alternate sources of energy by harnessing wind and water, you would be making a sustainable or responsible investment. Similarly, if you were to invest in a green fund that in turn invests in companies that provide environment-friendly solutions, such as compostable bags, plant-based fuel and reusable sanitary products, your investment will also be considered to be sustainable.
In a broader sense, experts also consider factors such as how a company treats its employees, its ethics, health and safety measures and protocol, and other such societal factors to determine whether investing in the company is sustainable or not.
How can you gauge the sustainability quotient of a company?
Broadly speaking, examining the company’s interaction with the environment (E); society, employees and consumers (S), and governance in the form of policies, stakeholder management and everyday processes (G) will help you determine whether it makes for a sound sustainable investment. Together, this step is known as evaluating the ESG. You can also seek help from financial experts who have deep insights on the subject to ensure that you make a responsible investment.
Sustainable investment in India
As seasoned investors the world over are beginning to take a keen interest in sustainable investment, Indian investors are warming up to the concept as well. According to Drops Before the Rain, a 2017 report by Oxfam India and cKinetics, globally, ESG-linked investments amount to a staggering $22.89 trillion, whereas in India, where this form of investment is in its nascent stages, the size of investments linked to ESG is estimated to be worth $30 billion.
While investing in sustainable companies is one option, another way to ensure that you investment is sustainable in the long term and in line with your goals, is to consider investing in fixed deposit. FD interest rates are high, and you can use an FD calculator to check your returns in seconds. Bajaj Finance offers excellent Fixed Deposits, as they carry ICRA’s MAAA (stable) rating and CRISIL’s FAAA/Stable rating. As a result, investing in fixed deposits helps you create a solid financial foundation for your retirement as well.
You can also consider investing in monthly FDs with Systematic Deposit Plan by Bajaj Finance, wherein you can save amounts starting Rs. 5000 per month. With such a disciplined savings option, consider saving more, and use the assured returns to build your retirement corpus easily. Â
Evaluating returns that sustainable investments offer
It is a myth that sustainable investments yield poorer profits as compared to investments that don’t factor in the company’s/companies’ ESG. In fact, investing sustainably will offer you the same results, if not better profits. You certainly don’t have to choose between your personal ethics and financial well being.
If a company has a sustainable approach, it is more likely to perform better for longer, thus making for a sound long-term investment. On the other hand, unsustainable companies are more likely to carry greater risk.
So, if you haven’t given sustainable investment a thought, certainly do take this information into consideration the next time you review your portfolio. Not only will you be able to contribute to the betterment of society and the environment, but you will also be able to achieve your financial goals comfortably.
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