There are many different approaches to investing sustainably, each with its own objectives.
Before you invest, take the time to understand how a sustainable investment is measured and whether it aligns with your objectives and financial goals.
For example, you may have heard of ESG investing, which stands for environmental, social and governance (ESG):
ESG investing is different to another approach – ethical investing – which actively avoids companies or industries that have a negative impact on society or the environment.
Others may also invest in assets – not just companies – that do not form part of a sustainable investment strategy.
Some investors put their money into sustainable investments to help them meet their financial objectives.
Environmental, social, and governance issues can impact share prices – both positively and negatively. Taking these factors into account when investing could increase the resilience of your investments.
It’s important to consider that:
Remember, the value of your investments can fall as well as rise, and you could get back less than you invest. All investments should be seen as a medium to long-term commitment, meaning you should be prepared to invest for at least 5 years.
The Financial Conduct Authority (FCA) is introducing several measures to give you more information about sustainable investment products.
The new rules mean some investment funds will have to change, which may include removing words such as ‘sustainable’, ‘green’ or ‘low carbon’.
Fund managers will be making these changes between 31 July and 2 December 2024.
From 31 July 2024:
These labels aim to help you make informed investment decisions and you should start seeing the information on your provider’s platforms.
Please note that funds domiciled overseas are not currently subject to these regulations.
The FCA also plans to extend these rules to portfolio management services from 2 December 2024, although the exact details and start date are subject to change.
There are 4 labels to help you recognise investment funds with different sustainability goals:
Investment providers can choose to use any of these labels if their funds meet the criteria.
For more information, visit FCA: Identifying sustainable investments.
Today, we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. For more information visit www.hsbc.com/sustainability.
This article was last updated: 28/05/2024, 11:08
