Investing: Sustainable investing

Sustainable investing is a relatively new phenomenon. The point is that investors take into account companies’ investments and their consequences for society and the environment. Interest groups also try to influence public opinion to encourage banks to invest sustainably. Banks are sensitive to this.

What is sustainable investing?

Sustainable investing is a way of investing in which the investor takes into account the social consequences of his investment and the consequences for the environment. The sustainable investor actively intervenes in the direction of the company when it comes to these topics. In doing so, he tries to enforce that the company is also concerned with the consequences of the environment and society. Companies are of course also sensitive to this. As a rule, the larger the amount or number of investors, the more sensitive the company is to criticism. This is because it is also directly tangible for them financially.

Sustainable investing?

The phenomenon of sustainable investing dates back to approximately the 1980s. Then mainly charity church organizations started this. This is also logical, because these are, as a rule, the most ideological institutions. From around the year 2000, institutional investors, such as pension funds and banks, and investment funds also started to become interested in sustainable investing. This is because their supporters are also becoming increasingly sensitive to the subject. This is partly due to the influence of the media. Sometimes interest groups also use the media to influence the supporters of banks, for example, to take action to influence the funds and companies in which banks invest. This approach is called the negative approach. A good example of this is the organization Oxfam Novib, which announced that various Dutch banks are investing in companies that make weapons.

Banks that invest sustainably?

There are also banks that try to advertise that they only invest in sustainable activities and companies. In the Netherlands, Tridios Bank and ASN-Bank are the best-known examples. Other banks, such as ING Bank and ABN Amro, do have funds with which they indicate that they only invest sustainably.

Indexes on sustainable investing?

There are also indexes that try to map which companies invest the most in sustainable funds. This can sometimes be done per subject, such as environmental policy, but also on social circumstances. However, mapping this is a time-consuming work, because it requires a lot of research. Very often it also comes down to comparing apples and oranges. Two indexes that are considered reasonably reliable at an international level are the FTSE4Good index and the Dow Jones Sustainability. In the Netherlands, an interesting attempt was made in early 2009 by Oxfam Novib, Milieudefensie, Amnesty International and FNV with the Fair Bank Guide . This was about arms trade. The bank ING emerged as the worst in the class. But for example, it often collaborates with Boeing, which invests in fighter planes. This is not necessarily wrong and therefore its position in the index means nothing at all. Fortunately, this was also emphasized by various media.