Responsible investments have been brought to the foreground with more companies recognising that long-term prosperity requires a move away from short-term profit as the only definition of value.
Multiple industries are happily embracing innovation and new technologies as they are keenly aware of the need to integrate environmental and social concerns into business decisions, measuring and understanding their environmental impact leading to a surge of investments into sustainable solutions. But what are the factors driving responsible investment? What motivates companies to consider this investment? Consider the following:
From COVID-19 to wildfires and severe storms, the recent years have been marked by significant events that have propelled responsible investing into the mainstream.
Global warming causing severe weather threats are on an upwards trend, which heightens the need for actions to implement environmentally friendly behaviours to offset the current damage. There are budding concerns over a potential energy crisis, as currently as a society we’re dependent on finite resources until viable sources of renewable energy are further established.
The new norm
Climate awareness and environmental protection have become a priority worldwide. So sustainable investing is something business owners and investors can no longer afford to ignore. The vast majority is calling for socially responsible solutions to be implemented to protect our planet. Moreover, studies show that global growth in sustainable investment saw its assets more than double over the past seven years; meaning that soon enough “sustainable or responsible investing” will simply be considered the norm.
For years it has been questioned whether sustainability undermines or improves financial results. Recent studies have shown that corporations that actively engage in or have invested capital into sustainable solutions secure higher ROI, lower volatility of earnings, and stronger dividends than those who have not.
This focus on sustainable solutions means investing in things that aid business, which results in higher quality products (or services), greater employee satisfaction and productivity, and better customer recommendations which in turn leads to better earnings.
A study by the New York Reputation Institute noted that as consumers we “choose 60% of products based on brand awareness and reputation”. Investing in sustainability results in growth for your customer segment and customer retention, which ultimately will mean better performance. This also means in times of crisis, such as the ones we have faced this year, organizations that champion sustainability will have continued support from their customers and others that share the same values.
Moreover, CEOs worldwide have noted that adopting sustainable solutions meant their companies became more attractive to applicants, increasing the company’s talent pool, and investors alike.
2020 was a year for reflection. Taking the steps to become a more sustainable organization, will ultimately create a better corporate atmosphere and help you to have a positive impact on society.