From tackling climate change, to equal rights and animal welfare – you can select investments based on your values, in a way that could help you achieve your long-term financial goals.
Investors are increasingly choosing sustainable funds as a way to help create a better world.1
Your investment can help nations, companies and societies to develop, innovate and grow. This means you’re not only investing in your own future, but investing in positive change and progress too.
As an investor, you’re likely to want to know where your money is going. When you invest sustainably, more of your money is aligned with companies that are making a difference.
Sustainable investing also recognises that companies that aim to solve the world’s biggest challenges could be those best positioned to grow.
It’s possible to invest with a conscience and make a profit at the same time.
Environmental and societal issues can impact share prices. Factoring these into your investments could help:
reduce the level of risk
increase the resilience of your investments
deliver long-term capital growth
Companies that can create value for all stakeholders (including the environment and society) are more likely to succeed in the long term and deliver stronger financial returns for shareholders and investors.2
Remember, the value of any type of investment can fall as well as rise and you may not get back what you invest.
Sustainable investment should be seen as a medium to long-term commitment, meaning you should be prepared to invest for at least five years.
Sustainable investing can use different methodologies and may be referred to as:
ethical investing
environmental, social and governance (ESG) investing
impact investing
socially responsible investing (SRI)
values-based investing
conscious investing
green investing
While they broadly mean the same, there are some key differences in the way they work, which are important to know before you choose how to invest.
Let’s take a closer look at some of the main approaches and what they involve.
Ethical investing tries to actively avoid companies or industries that might have a negative impact on society and the environment. This is called negative screening. Sectors such as tobacco, animal testing, gambling and oil and gas are typically excluded from this type of investing.
ESG investing actively selects companies that meet specific environmental, social and governance requirements. It’s less restrictive than ethical investing as it considers companies that are adapting, such as oil companies that invest in clean energy.
Impact investing actively selects companies whose positive impact on the world can be measured. For example, those who generate a specific amount of recycling or save a certain amount of water.
HSBC uses the ESG framework to measure the level at which a company is tackling environmental, social and governance issues.
| ESG framework |
Example |
Factors include: |
|---|---|---|
| Environmental |
What impact does the company have on the environment? |
• climate change • air and water pollution • waste management • energy efficiency • water shortage |
| Social |
How is the company supporting its employees, clients and communities? |
• human rights • consumer privacy • gender equality • data security • health and safety |
| Governance |
How is the company governed or managed? |
• board structure • company ownership • financial reporting • business ethics and culture • executive remuneration |
| ESG framework |
Environmental |
Environmental |
|---|---|---|
| Example |
What impact does the company have on the environment? |
What impact does the company have on the environment? |
| Factors include: |
• climate change • air and water pollution • waste management • energy efficiency • water shortage |
• climate change • air and water pollution • waste management • energy efficiency • water shortage |
| ESG framework |
Social |
Social |
| Example |
How is the company supporting its employees, clients and communities? |
How is the company supporting its employees, clients and communities? |
| Factors include: |
• human rights • consumer privacy • gender equality • data security • health and safety |
• human rights • consumer privacy • gender equality • data security • health and safety |
| ESG framework |
Governance |
Governance |
| Example |
How is the company governed or managed? |
How is the company governed or managed? |
| Factors include: |
• board structure • company ownership • financial reporting • business ethics and culture • executive remuneration |
• board structure • company ownership • financial reporting • business ethics and culture • executive remuneration |
If you’re considering sustainable investing, we can help you get started. To keep things simple, we offer 2 routes:
Choose from our sustainable investment portfolios to find the one that could suit you. You can be confident your money is behind companies trying to make a difference – at a level of risk you’re comfortable with.
If you’d like to make your own investment decisions, our online fund platform (Global Investment Centre) has a range of funds to choose from. There’s no commitment and you can take all the time you need to research what’s there.
To invest with us, you need to have an HSBC current account or savings account. Eligibility criteria and charges apply.
1 Source: Schroders: Global Investor Study 2020
2 Source: STERN: ESG and Financial Performance
