Wind turbines for sustainable power generation at sunrise

Sustainable investment

What to look out for when investing in sustainable companies

If you’re looking to invest your money in a way that also benefits people and the environment, which quality labels should you look out for?

Angélique Schweizer

First think about what type of sustain­ability is eligible for your investments. There are several criteria for this. The so-called ESG criteria are particularly common. These three letters stand for Environmental, Social, Governance. This means that ­companies that take responsibility for the environment, society and their own actions are considered sustainable.

Companies with a high “impact” factor go one step further. This means that they have a demonstrably positive effect on the environment and society. If ­sustainability is very important to you, you should primarily invest your money in these companies.

Talk to experts

However, it’s not always easy to find a ­sustainable investment that meets your own sustainability requirements, as there are so many offers out there. Checking compliance with sustainability criteria requires time and reliable ­information. That’s why ­you should also discuss your sustainability preferences with a banking expert. They­ have the knowledge you need and access to the relevant data. There are different investment products depend­ing on the type of sustainability you wish to ­support.

Don’t put all your eggs in one basket

In addition to compliance with sustainability ­criteria, the selected companies are reviewed in terms of earnings, revenues and market positioning – and how well they fit into a diversified ­portfolio. This spreads the risk of your investments more broadly. If you focus ­too much on one sus­tainability criterion, e.g. ­shares in companies in the green energy sector, you will be taking a ­higher risk with your portfolio.

Company sustainability reports provide information

If you wish to build up your own equity ­portfolio, you can use ESG criteria to guide your selection. Sustainability reports from companies tell you whether they have thought about the actual impact of their actions on the environment and society.

Angélique Schweizer is a client advisor at Migros Bank and an investment expert.

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