Investment Intel by Jakub Krivan #4: SUSTAINABILITY IN INVESTING MATTERS

The social impact of investing transcends far beyond the financial world. World economy, living conditions of millions around the world and even the Earth's environment are all influenced by where investors decide to put their money. It's hardly surprising then, that the question of sustainability keeps coming up ever more often. But what is it, really?

What is sustainability? In the broadest terms, sustainability is simply about making things work permanently through avoiding harm and pursuing improvement. Among the various efforts to make this concept work in practice is the 2030 Agenda for Sustainable Development signed by all UN member countries in 2015.

This agenda set out 17 different sustainable development goals in different areas from education through climate action all the way to decent work and better health. The very first goal strives to end all poverty through ensuring equality and access to basic resources and services:

“By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance.”

Why should sustainability concern me as an investor? No matter the size of your investments, money has, by definition, the power to shape the world in all of the above 17 areas. Why is this important to you? Because the decision about what you invest in literally nudges the world in a certain direction – and that's a position of responsibility. And I, for one, think that everyone in a position of responsibility should be consciously aware of the impact that their business activities have in any and all of the said 17 fields.

In other words, while there's an endless number of possibilities where to invest, some of them may be better in terms of how fast we approach (or drift away from) the sustainable development goals that all of us should strive for if we want to, well – survive.

How can I contribute? I'm glad you asked! Basically, this is what your investment options look like:

You can go for conventional investments, where efficiency and returns are the primary driving force, and forget the rest. Or you can spend a bit more effort and actually make sure that your money doesn't impact anything or anyone in a bad way and invest responsibly.

Better yet, you can decide for what's called social impact investment. This is a term for investment products whose principle involves providing low-income citizens around the world with basic financial services. These translate to your returns, as well as a little step towards the sustainable development goals. Win-win. And I’ve already written about how there's never enough win-win deals in the financial world.

Microfinance is one of such concepts, in which people invest into a fund, which uses the money to give the poor a chance to grow their business, improving their families' health, well-being, education and living standard as such.

The Takeaway If we, as society and species, want to survive in the long term, we need to make decisions contributing to a sustainable way of life. This includes decisions about investing, itself a powerful tool of shaping the world we live in.

Investing in the right products can literally make or break our way to a sustainable society and environment. And that's what we as investors should always keep in our minds.

Every investment bears a risk. The basis for investments is the presently valid prospectus, the current versions of the key investor document (“KID” or “KIID”) as well as the annual report (and/or the semi-annual report), which are available free of charge at the respective management company. No assurance can be given that the investment objectives are achieved.