the key to a lasting legacy?

Giving value to your savings, financing companies to fight global warming, investing in retirement and for future generations… There are many ethical reasons for choosing socially responsible investment (SRI). However, there are tribal reasons. In fact, these investments balance the risk with the prospect of profitability based on a variety of investment instruments. Three experts decipher the SRI investment at our next meeting, En Plateau Avec. The event will be broadcast live on our website on Tuesday, July 5 at 18:00.

There are many solutions to align your investment goals with your beliefs about sustainable economic transition. The vast majority of listed investments (such as index funds) and unregistered ones (including real estate) are now available in products aimed solely at financing responsible projects and companies.

Each administration chooses a guiding principle to define them. For some, these are projects and companies that take concrete action in favor of good governance. Their goal is to reduce the negative impact of their activities on the environment and society. Other insurers and asset managers decide to choose only the most profitable companies and projects for their investments.

Several brands are sent to responsible investors

Regardless of the philosophy used, all responsible financial professionals rule out conflicting activities (such as arms sales and adult entertainment). They evaluate the “non-financial efficiency” of projects and companies before studying their financial results. Non-financial criteria relate to the environment, social affairs and governance (hence the term “ESG criteria”, often referred to as professionals). They are evaluated by independent rating organizations, as well as financial criteria.

Companies may also require the labeling of their action plans in favor of the environment (Greenfin label), social (Finansol label) and governance. Since 2016, the SRI label (revised by the Ministry of Economy) identifies the companies that are most committed to the 3 ESG criteria. Based on the data collected, each administration may or may not prefer one of the 3 criteria in its method of analysis. This personalized network is public and savers have access to it before any investment. Thus, each investor can choose an investment product that meets important issues (health, climate, etc.) and adapted to his heritage and investor profile.

Healthcare, transportation, energy… SRI has many investments and topics

The SRI (Social Responsible Investment) has developed over the last twenty years and, in particular, since the Paris Agreements (12 December 2015, under COP21). This marked the commitment of 196 countries to reduce greenhouse gas emissions (compared to 1990) to preserve the climate.

Opportunities for innovation and growth for companies remain significant in many sectors. For example, in transport, annual CO² emissions in 2021 will be reflected at the same level as 30 years ago. The European goal is to reduce them by 40% over 30 years (2050) by investing in hydrogen or electrifying vehicles. Savers can encourage the energy transition of the transport sector by investing in funds dedicated to this issue. Others prefer to invest in health, protecting the oceans, or even accessing education and disseminating knowledge around the world. However, you can also focus on investing in emerging companies, according to all ESG criteria (environmental, social and managerial) instead of a separate thematic choice.

Risk, profit, investment horizon: to invest responsibly means to invest first

Like other investments, responsible investment products have different levels. The risk of capital loss may be low for conservative investors or higher for more aggressive investors with long-term investment horizons to smooth over financial market fluctuations over time.

Similarly, the profit forecast may be reasonable or more ambitious, depending on the degree of risk. Thus, SRI investments, like others, should be selected as part of a defined heritage strategy. In addition, investors are advised to always look closely at the descriptive prospectus of the product.

To help you choose the right investment for your personal situation and your wealth goals, Sidoni Vatrigant and her three guests are exploring SRI opportunities at our next En Plateau Avec event.

Registration for the meeting on our website Tuesday, July 5, from 18.00 to 18.30. For more information and to add this event to the agenda: click here

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