Is it Sustainable? Three things to consider when investing your money
When you think of sustainable living, what comes to mind?
Switching off the lights when you leave the room? Using public transport, a bike or walking? Buying organic food?
All of these are brilliant ways to reduce your carbon footprint, but have you ever thought about the impact of where you invest your money?
It turns out where you bank can be having an indirect impact on your carbon footprint or ethics!
You might indirectly be investing in the very things you are trying to avoid in your daily purchases and lifestyle. For example when I started to dig deeper, I discovered the bank I was using invested in military arms, animal testing and poor human rights.
Fortunately ethical banking is now becoming mainstream, thanks to raised awareness and a growing desire from consumers for transparency. Here are three things to consider when it comes to putting your money where your mouth is!
Ethical banking and savings
We all want the best return on our investments, but as mentioned, not all banking practices are environmentally sound or sustainable. Some banks use our earnings to make themselves – and sometimes their customers – richer by investing in companies that fund problems like modern slavery, pollution and the climate crisis.
Take a look at banks that offer ethical policies and only invest with banks that lend your money to organisations that make a positive impact on society and the environment.
A Sustainable Stocks and Shares ISA lets you invest in a way that matches your values of acting responsibly and making a positive difference. The fund aims to invest in innovative, sustainable companies that offer both the potential for long-term growth and a positive benefit to society.
This kind of fund is also known as an ESG investment. ESG covers environment, social and governance, meaning the fund invests in companies that show leadership in these three areas. For example you can support companies that are tackling climate change, campaigning for human rights or are solving water scarcity.
A word on cryptocurrency
One of the most potentially lucrative but NON sustainable investments is cryptocurrency! Bitcoin has been in the news recently with the staggering statistic that a single bitcoin transaction uses roughly 707.6 kilowatt-hours of electrical energy – the amount used to run the average US household for 24 days! Processing these transactions for thousands of users over a day makes a huge demand on energy resources and carbon emissions.
You can still make good investment and market gains with cryptos by switching to a more environmentally friendly one – do your research before you start making resource-hungry transactions!
There are many other areas where you can use and invest your finances to improve environmental sustainability and achieve more ethical growth and interest. Think about mortgages, pensions and Socially Responsible Investing and Hedge Funds. For more information Good Money Week gives clear impartial information on ethical finances.