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 create a better world.[@source-schroders]
The global population is expected to reach 9 billion by 2045.[@source-united-nations] As people live longer, more of us will be affected by the way our nations are run, the state of our environment and the wellbeing of the people in it.
Your investment can help sustainable companies 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 and what it's being used for. When you invest sustainably, more of your money is going towards companies that are making a difference.
Sustainable investing also recognises that companies who 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:
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.[@source-stern]
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:
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 actively avoids companies or industries that 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 have a positive impact on the world. 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? |
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| Social | How is the company supporting its employees, clients and communities? |
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| Governance | How is the company governed or managed? |
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| 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: |
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| 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: |
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| ESG framework | Governance | Governance |
| Example | How is the company governed or managed? | How is the company governed or managed? |
| Factors include: |
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If you're considering sustainable investing, we can help you get started. To keep things simple, we offer 2 routes:
If you're looking for advice on sustainable investing speak to one of our Wealth Managers who can advise which funds might be suitable based on your investment needs. So 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 (International 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.
HSBC Bank plc, Jersey Branch has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information.
The HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC Bank plc, Jersey Branch and the HSBC Group give no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article.
This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions for them. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for such use or reliance by you.
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