What is Bitcoin and is it an ethical investment?

Bitcoin is the talk of the town right now, mostly because it’s value has risen almost 500% in 2017 alone.   So no surprise, someone asked me the other day if at Goodments we see it as an ethical investment.

Now although we don’t pretend to be the authority on what is and isn’t ethical, as an app that matches you to shares based on your values, we take a lot of interest in the area.

Generally, when talking about a currency, people don’t consider ethics of the currency itself.  They might have a view on the country and if it aligns to their values and morals. But rarely would they look so closely at the currency in isolation.  In the case of Bitcoin though because it’s more than just a currency, we can consider it on its own.  Not least because it crosses borders and is a disruptive technology that impacts the world we live.

What is Bitcoin really?

Simply put, Bitcoin is a digital currency which can be used for payments and as a store of value. It operates outside of existing financial systems and offers the ability to instantly transfer money and property at very low costs.  Other digital currencies include Ethereum, Litecoin and Monero.

There are no physical bitcoins and as a result all balances are kept on a public ledger in the cloud. All Bitcoin transactions are verified by a massive amount of computing power.  New ‘coins’ enter circulation using additional computing power, based on developing code to release new coins.  Known as Bitcoin mining, this involves solving a computationally difficult puzzle to discover a new block, which is added to the blockchain, and receiving a reward in the form of few bitcoins.  It’s supremely geeky stuff.

Is it an Ethical investment?

At Goodments, we know that ethics and sustainability are in the eye of the beholder.  What one person thinks is ethical or sustainable may be different to someone else.

That said, sustainable investing can be assessed against 3 key criteria; Environment,  Social and Governance (also termed as ethics or transparency).  Ultimately, for investors looking to make an ethical investment, will this share have a positive (or neutral) benefit to the environment and/or society.  So we’ve considered Bitcoin through that lens.

  1. Environment

As we look at Bitcoin, right now there are some significant negative environmental impacts.

Wired recently reported that each bitcoin transaction requires the same amount of energy used to power nine homes in the US for one day. And miners are constantly installing more and faster computers. The total energy use of this web of hardware is huge—an estimated 31 terawatt-hours per year. More than 150 individual countries in the world consume less energy than this amount annually! 1

Some argue that although this is significant, it is less than the banking sector.  However, at this stage Bitcoin is a counter currency, new to the market and should be starting out on a better footing with greater efficiency.

  1. Social

Assessing the social impacts of Bitcoin is challenging as there is little data available.  What it is doing is helping to equalise wealth, making a great deal of new and young investors incredibly wealthy.  According to Bitpay, Bitcoin is supporting less developed economies with Latin America showing the fastest growth in transactions. 2 Depending on which side of the fence you sit, there is an argument that the anonymity that Bitcoin transactions bring are a benefit to heavily surveillance societies.   But at this stage it isn’t clear if Bitcoin is just creating a new wealth gap, present across a younger tech-savvy generation.

  1. Governance

Governance is commonly understood to be a measure of transparency, control and accountability.  Today, Bitcoin is inherently secretive and protective of providers and users, it’s unregulated and control sits with few secretive independent ‘miners’.  There is also a lack of protection for people who get hacked or lose their money.  In many ways, it operates on the black market (or dark web) which doesn’t help it rate well on the governance front.

So….

On balance, Bitcoin today probably can’t be seen as an ethical or responsible investment. But what about in the future?

The future of Bitcoin

Today, we are not even truly sure if Bitcoin and cryptocurrencies as we know them will be around in 5 years, or if they will be replaced by something completely different and as yet unknown.

Brian Forde, former White House Senior Advisor and current Director of Digital Currency at the MIT Media Lab compares the infancy of bitcoin and cryptocurrency to the early days of the internet and the introduction of email.  Which we now know was the tip of the iceberg.

There is much commentary about the opportunity for Bitcoin to be a game-changer when it comes to wealth distribution.   If Governments were to embrace it, as secondary to their national currency, and experiment with its use to distribute wealth (e.g. as a source of universal income or benefits) it could be used and regulated to lift huge portions of society out of poverty.  Its digital nature brings with it the possibility of regulating and monitoring it.  Allowing Governments to keep it in the hands that need it and on the goods they need without risks of it being corrupted – in the way an untraceable physical currency can.

In conclusion 

Goodments doesn’t yet enable our investors to invest in Bitcoin on our platform.  Today, it’s draining on our environment and lack of regulation make it an unlikely candidate for Ethical Investment of the Year.  But if as Bitcoin could be used in a more positive way in the future, it is something we look forward to seeing unfold.

Ethical investors looking to invest on their terms.

Ethical investing, otherwise know as sustainable or responsible investing is on the rise. Some reports put the growth rates at 86% year on year for the last 3 years,  with billions of dollars now invested ethically around the world.

But where is the growth coming from? We at Goodments, a new invetsment app that matches investors to shares based on their environmental, social and ethical values, believe its coming from millennials.

We’ve has conducted a number of pieces of research over the last 6 months and the following are a collection of our findings:

The number of young australians who identify with ethical investing .             Goodments Survey (1200 online  Australians) 

We are always surprised at the maturity and foresight, particularly of our younger supporters, when it comes to both their responsibility to live their in a sustainable way, but also to manage and grow their money with the same mindset. We’ve met people in their final year of university who are signing up to Goodments as they want to be prepared for when they enter the workforce. As well as people who are a few years into their careers with savings accounts of $40k +, who are now starting to look at alternatives to cash savings, to help them grow their wealth in a sustainable way and allow them to get ahead.

Whats interesting, is that when it comes to the balance of financial performance and sustainability performance, these more ethically minded investors are willing to accept slightly lower financial returns for good environmental, social and ethical performance.

The importance sustainability performance when it comes to investing. Survey of Goodments customers
 

Luckily, this could be a mute point, with plenty of research now suggesting that investments in sustainable companies, outperform investments in their less sustainable peers.

There are commonalities in personality traits of those want to invest ethically. The strongest and most common traits focus on empathy, thoughtfulness, imagination and a desire to overcome challenges. These traits tend to manifest themselves in the ability for people to accept uncertainty and process abstract information. All key strengths when it comes to thinking about taking action on sustainability issues and to process the often disparate information sources to form a view of a company to invest in.

Key personality traits found in ethical investors. Survey of Goodments customers. (Personality research completed in partnership with Veebit). 

Although there are common personality traits between sustainable investors, there are differences in what causes each person holds closest to their heart. These preferences influence what business practices different people want to support.

Common causes ethical investors want to support and promote. Survey of Goodments customers. All designs owned and reserved by Goodments.

Likewise, there are key differences in what each person deems to be unacceptable when it comes to investing in companies.

Business practices that ethical investors choose to exclude. Survey of Goodments customer. All designs owned and reserved by Goodments.

Overall ethical investors are looking to invest on their terms. This means that increasingly they are looking for a more complete picture of a company’s performance, which includes not only financial performance but also environmental, social and ethical performance.  When making their choices in which companies to follow and which to exclude, the decision becomes very personal.

Author: Tom Culver, Goodments CEO and Co-founder.

Join the waitlist: www.goodments.com

Image: Martin Reisch

Adieu Paris. Business leaders putting their hands up to take responsibility. 

This weekend we saw Donald Trump make the decision to opt the US out of the Paris climate accord. A global, non-binding,  agreement to limit the increase in global temperatures to 2 degrees, aiming to safeguarding the future of the plant for today’s and future generations.  It initially took America under the leadership of Barak Obama to get all but two countries to sign the agreement.  The US now joins Syria and Nicaragua as the 3 countries who wont commit to the cause.

Trump’s reason for opting out;

  • The agreement “disadvantages” the US.
  • The deal left “American workers, who I love, and taxpayers to absorb the cost in terms of lost jobs, lower wages, shuttered factories and vastly diminished economic production.”

The CEOs and leaders of many big American companies have different views, committing to pursue the goals laid out in the Paris agreement, as well as their own initiatives.  Why? Because as global corporations,  they understand the influence they can have at a global scale. These leaders also see the opportunity to invent new technologies and advance the way the world does business in order to change the world extraordinary ways.

Facebook:

Screen Shot 2017-06-03 at 3.25.03 PM

 

Google:

General Electric:

Microsoft:

It also led to the CEO of Disney, along with Elon Musk to leave the president’s business council:

It wasn’t only business leaders,  the states and citizens Trump believes he made this decision for also rejected his reasoning.

“I was elected to represent the citizens of Pittsburgh, not Paris,” Trump told the world. Never mind that the good folks of Pittsburgh are citizens of the United States.  The response:

“So we’re getting out,” Trump explained in his announcement.  Thankfully this decisions doesn’t seem to matter to a number of the world most influence business leaders.

It could not be all over…….According to the experts it will take 4 years for the US to exit the agreement. That just so happens to be the day after Trumps last day in office (assuming he makes it to the end of his term and doesn’t get a second one!).

You might also be interested in Corporations not Government lead to a sustainable future.

Ever wondered how your investments perform when it comes to ethics and sustainability?

It’s sometimes argued that including environmental, social or governance (ESG) factors into your investment decisions isn’t an investment strategy in itself. That may be, but when you consider that sometimes as much as 50% of company’s value is made up of non financial data, if you’re not taking ESG into account, then you probably don’t have the complete picture of how the company you are backing is performing now, or in the future.

You can use this tool to check out how your investments on the ASX 300 fair.

According to RIAA, about 50% of institutional investors in Australia use ESG in their investment strategies. Some do it because its a better indicator of long term risk and return. ESG allows others to invest in their view of the future, think solar over for coal for example. Some use it to ensure that they are not investing in business practices that don’t align to their values. For whatever reason, there is plenty of research to indicate that more sustainable companies outperform their less sustainable peers over the long term. Which means having a more complete picture could result in higher returns.

What is ESG?

ESG (environmental, social and governance) is a generic term used in capital markets and by investors to evaluate corporate behaviour and to help determine the future financial performance of companies.

  • Environment assesses key business practices ranging from emissions and carbon intensity, waste management and recycling, to green energy production. By lowering expenses (e.g generating solar power rather than buying energy) and creating efficiencies (e.g lowering packaging cost through recycling), can all have a material impact on bottom line.
  • Social assesses key business practices focussing on workers and human rights. Topics such as diversity, (which at a board level has shown to reduce company risk and increase share price value), supply chain and supplier standards, human rights and justice, community development and even staff happiness (which research suggest has a material impact on productivity and therefore profit).
  • Governance relates to corporate structure, board independence and transparency and even covers a businesses stance on certain practices, such as animal testing. Some consider this a fundamental view of company and management ethics and ethos. Governance is generally considered by investors to be an integral part of assessing corporate risk through understanding how a business is conducting its affairs and can therefore be a lead indicator on assessing the potential risk of any investment decisions. For example some ESG assessors were able to flag transparency and governance issues at VW, which were the precursor to the recent emissions scandal which permeated through the entire business.

Benefits of ESG to risk and return

Capital loss: at its most basic level, using non financial indicators to identity risk helps to protect the capital you’ve invested and can go a long way to increasing long term returns. For example, if you have a $1 invetsment which loses 50% of its value, you have $0.5. To get back to a dollar you now need a 100% return, not a 50% return. Simple protection of invested capital to increase long term returns is often overlooked by investors and assessing ESG factors can help.

Returns: whether the link between outperformance and high ESG ratings are casual, or simply correlation, its hard to argue the benefits to a company’s bottom line and share price. One current trend for using ESG is to identify long term investment opportunities. If you are going to invest $1 today for 10 or 20 years, are you going to invest it in mining or solar technology? A growing portion of society and investors would back the long term opportunities in new clean technologies rather than any potential short term return uplifts in higher risk carbon intense assets or practices. A second key trend is investors looking to make money and do good at the same time. ESG help investors understand that these two things do not need to be mutually exclusive.

How can you use ESG to invest?

  • The positive screen: systematically select sectors, companies, and practices based on areas that align to your values. Commons positive categories include recycling and waste reduction, renewable energy and clean tech, protection of natural environment, human rights and employee conditions, community development, diversity and equality, corporate transparency, corporate sustainability policy.
  • The negative screen: systematically excludes industry sectors, companies, practices, or countries based on specific ESG or ethical criteria. This approach is also often referred to as values-based, or ethical screening. Common screens include gaming, alcohol, tobacco, weapons, pornography and animal testing but now expand to things like sugar or fast food.
  • Best of breed: investment in sectors, companies or projects selected for positive ESG or sustainability performance relative to industry peers. Suitable for those investors who want to maintain investments in industries that might otherwise be screened out, but select those that are performing the best from an environment, social and governance perspective.

You can use this tool to check out how your investments on the ASX 300 fair.

Author: Tom Culver is the CEO and co-founder of Goodments.

*The information in this post and the links provided are for general information only and should not be taken as constituting professional advice from the Author.

Image: Emily Morter

How an inner-west, solar-powered beer project inspires hope for a sustainable future

You would have to agree that those Inner West folk are an eclectic and interesting bunch. At the heart of the inner west is Newtown and its neighbouring suburbs, recognised by its authentic and offbeat style, vintage and artisanal wares, coffee cred, craft beer breweries and communal atmosphere. Think Brooklyn, East London or the Kreuzberg borough of Berlin. The general vibe of the Inner West could be reminiscent of old school sentiment. However, the Inner West-ers are certainly not behind the times when it comes to embracing new technology. After all, there are still some things that are uncool about staying in the past, such as investing in fossil fuels, fast fashion and unethical work practices.

A brilliant example of the adoption of renewable energy into a business model is the local brewery legends at Young Henrys. The founders of the successful brewery, Oscar McMahon and Richard Adamson, are in touch with their communities love of craft beer. What they are also clued in to is the local communities interest in innovative renewable energy projects. As a savvy business decision, it just made sense to combine the two — and what do you get? Solar-powered beer, of course! The idea was wildly successful in terms of investor interest. So how did it all happen?

Solar-power will give breweries that extra strength to succeed in the future

Pingala, a Sydney-based company specialising in community owned solar projects, came to Young Henrys with an idea. What if the solar installations they were planning to put on their roof were owned by local people, invested in the future success of their company? Incorporating that idea paid off. Demand for investment in the Pingala project was so strong that shares were sold in 9 minutes (the investors were drawn from a barrel of 300 applicants). Young Henrys pays Pingala for the lease of the solar panels, Pingala generates a decent income to pay their costs and shareholders are expected to earn a 6–8 per cent return for investments. A rewarding investment for the local renters in the area who can’t invest in their own homes but instead can put their money into renewable projects in the community. It’s a mutual benefit for all, especially Young Henrys, who become owners of the solar panels once they are paid back. Solar panels pay for themselves in around 7–8 years and after that they will receive free energy to power their business whenever the sun is shining. In fostering a community project, Young Henrys are able to forge a deeper engagement between consumers and their brand and become game changers in their own right. As McMahon proclaims “solar-powered beers tastes better.”

Pretty exciting right? Now imagine if we took that Inner West mindset and applied it on a global level. It is empowering to think of the collective influence of people on a global scale, investing in companies that have sustainability at the core of their business models and are taking responsibility for what they produce and the long term effects it has on the world. Ultimately setting a global standard and demand for companies to use their business to address important issues in the process.

Curious about using your investments to create a better world? Why not check out Goodments. By recommending you companies that align with your ethical and social values, Goodments makes it easier to make informed investment choices. Whether that be to invest in companies that are making the switch to 100% renewable energy, or creating initiatives to ensure equitable rights for employees throughout their supply chain. Importantly, these investments are shown to be more profitable in the long run, so you can invest ethically without sacrificing returns. Still not convinced? Think about that extra cash that could be spent on craft beers and fair-trade coffee.

Header Image courtesy of Young Henrys

 

What to do with your cash until the property bubble bursts

A discussion on how to save for a house and still have smashed avo on toast.

This month we heard that Australian Millennials have the second lowest rate of home ownership in the world. On top of that, the Governor of the RBA, Philip Lowe, declared that the current growth in the Australian property market is unsustainable. So I thought I’d share some thoughts on your options for your hard earned cash until the bubble bursts. These tips have been curated through experience — both personal and professional — and from the guidance of others.

Today there are a lot more options than just leaving your dollars under your mattress at home. So here goes:

The bank:

If you’ve got plans for the money in the next few years, the safest place is probably the bank as you should be thinking about protecting your money as much as growing it. Or at least leaving a good chunk in a savings account.

Investing:

There are lots of investment sites and managed funds available online these days. If you’re not going to need the money for 3+ years, this is an option (always best to try and leave 1 to 3 months net salary in the bank for a rainy day though).

The golden rules of investing pretty much go:

  • Start small. No cowboy/girl antics. Start with a little and see how you go.
  • Invest over time. Regular investing can reduce the risk of dropping it in the market on a bad day. It can increase your long term returns too.
  • Diversify. Diversify. Diversify. Eggs in lots of different baskets, whether that is different shares (e.g. Tesla, plus Apple, plus A2 Milk) or different types of investments. You can see the benefits of diversification from as few as 6 different stocks.
  • Invest for your stage of life. If you’re nearing retirement, you need to be much more careful. If you can leave the money on the market for the long term, you can take a little more risk.

So where to start? Here are some popular options that weren’t even around a few years ago:

Micro-investing: Sites like Acorns allow you to set up an account and add to it regularly, by what they call ‘roundups’. Imagine you buy a coffee for $3.50, then the 50 cents that rounds it to the nearest dollar would go into your investment account. It’s mini-investing without thinking about it.

Robo-advice: Companies like Stockspot allow you to get automated financial guidance on where to invest you money. They call themselves a digital investment advisor. A good idea if you want automated advice and aren’t keen on paying the bank.

Sustainable investing: Companies like Goodments allow you to invest in shares without compromising your values.Research shows this is often a better long-term investment. If you think renewable energy will take over from fossil fuels, why would mining be a good investment anyway?

Equity crowd-investing: An evolution of crowdfunding sites, companies like Equitise let you buy shares in a company, so you can support start-up businesses and hopefully make a mint in return.

Peer-to-peer lending: For something a little different, you can use a site like Society One to lend your money to someone else like you. You should get good returns on your money and they will get a better rate than they would from the bank. Think of it as ‘people backing people’.

On-demand advice: places like Nod allow you to pay per question for advice from professionals without committing to a long-term relationship. Good if you have a burning question you want a quick answer to.

I think that is a pretty good place to start. You can ponder your options over some smashed avo on toast.

Author:

Tom Culver is the CEO and co-founder of Goodments.

*The information in this post and the links provided are for general information only and should not be taken as constituting professional advice from the Author.

The future: Which path will you take?

We are coming to the crossroad of competing futures. Some will take what society tells us is the convenient option, assessing the situation and shrugging their shoulders saying “well, there is not much I can do”. They will take the worn and well travelled road, the one with the heavy display of footprints. Stumbling blindly through the dark is when the anxiety starts to kick in. Thirsty, breathless and lacking resources, they power on into the abyss.

Or perhaps more of us will start breaking away, cutting our own path, or collaborating with our fellow humans in a combined effort to pave the way to a sustainable future.

Two roads diverge. One path ends in an environmental utopia, one path has irreversible consequences.

The path of total chaos.

The insatiable demand for oil has reached its peak. Freshwater is a continual source of conflict, rationed to the highest bidders and monopolies, or else obtained by criminal means. Humans are pitted against humans in an ongoing battle for food, energy, possessions and refuge. Children are brought up in a world where pollution is what they will only ever know. Mass deforestation has lead to the extinction of the majority of wildlife, save the odd cockroach or rat. Droughts, flooding and civil conflict are rampant. Bringing with it a widespread diaspora of climate refugees. Life is bleak at best.

Dramatic? Perhaps. Plausible? Certainly. Let’s paint a picture of equally plausible path two.

The path of future optimism.

This path is a lot more pleasing to the human psyche. Although 80% of people live in or surrounding thriving metropolises, these cities will be made up of small communities living off a shared renewable power source. The mandatory implementation of renewable energy infrastructure means that every home is a consumer, as well as a producer of energy. Solar panels, wind turbines and hydro generators are standard and well established installations, meaning that there is no longer an ongoing cost and demand for energy. Instead, there is an excess of energy stored in advanced battery systems, able to be transported instantaneously around the globe. Abundant renewable energy powers all modes of transport, businesses and technology, as well as pocket-sized, personal power converters. The anxiety of a consumer culture tied to a finite and insatiable power supply is non-existent. Instead new economies evolve. Circular economies are standard, everything is reusable. Excess waste is turned into fuel or reused. Advancements in technology means that water is recycled, creating an everlasting, clean supply. Excess carbon is converted into construction materials and as a valuable ingredient in the soil that nourishes small scale, hydroponic, pesticide-free farms. Communal gardens and forests surround cities, within parklands or growing vertically on buildings. More trees mean fresh air and wildlife is abundant. The well-being of the community is an important factor of economic growth. Shared economies are a way of life. Conserving and preserving is the collective mindset. Bamboo and hemp clothing is not just reserved for hippies and eccentrics. Environmentalism is not a radical idea anymore.

In reality, there are multiple paths to future optimism. Grand, game-changing sustainable ideas are yet to be invented. However, YOU have a choice to decide which path you would like to go down. Choose the one less travelled. Break away from the norm. Or better yet, make sustainability the new norm.

The precautionary principle should be reason enough to invest your time and money in a sustainable future. At Goodments, we are pretty certain that we are on the right path, are you with us?

Here’s one to put at the top of your ‘adulting’ to-do list

Whether you’re a rookie embracing adult life in all its glory, or perhaps already a decade or so into the adult game, now is a better time than ever to start thinking about your long term financial investments.

Perhaps you are working a cool new job that pays the bills with a tidy sum left over, moved into a sweet new house and are taking up a new craft to show that you are serious about this ‘adulting’ business (looking at you, KonMari). What now?

Next is to start thinking about the big picture. What is the best way to maximise your long term financial security whilst guaranteeing your hard earned dough empowers ethical business? The answer lies in how and what you choose to invest in.

While it is easy to imagine the “Australian Dream” of owning your own home, and the adage “there’s nothing safer than brick and mortar” instills a yearning to be a proud home owner, in reality, the opportunity to buy property is becoming increasingly unaffordable in most major cities. Unless you have amassed a considerable amount of savings (you will need around $100,000 for a Sydney house deposit these days), you may need to hold off on a piece of that property pie.

On top of that, we are living in an era where sustainability just can’t be viewed as an afterthought. With climate deniers posing a bitter threat to the planet and the US govs latest attempts to install dark-age era environmental policies, now is the time to question the underlying impacts of where you are investing your money and how you can invest in companies that are making a conscious effort to do no harm to the planet, if not bettering it (and smashing their performance targets at the same time).

This is where Goodments comes in. No longer do you need to worry about unwittingly putting your investments into funds who have stakes in oil (ugh!) tobacco (bleugh!) and firearm companies (no thanks!). Times have changed from the traditional ways of investing. As the legendary Keith Richards once said, “To make a rock ’n’ roll record, technology is the least important thing.” However, when it comes to investing, technology certainly has its advantages. These days, just about every man, woman and child has a smartphone. We no longer lug around phones the size of bricks and there’s an app to make life easier for just about everything these days. The rise and success of disruptive technologies (think Uber, Airbnb and Netflix) has given power to the consumer, so why shouldn’t it work for investing?

We believe that investing in sustainable business should be easy, and that investors should have the choice and knowledge of where they are investing their money. The best investors out there know that investing in companies that have sustainability built into their DNA are shown to do well in the long term. The first step is to recognise that you have the power to make your investments count towards what matters to you, and we’re pretty optimistic it will create a better future for your wallet, corporate culture and the planet.

More than three quarters of people agree that sustainable investing is more important than it was three years ago, while 78% anticipate it will be more important three years from now. In the U.S. assets managed with sustainable investing criteria has already increased more than 135% since 2012. (2)

This attitude coincides with Millennials becoming the largest generation in the world’s workforce in 2016, and in 2017, becoming the generation with the most spending power. A generation also thought to be the most purpose driven generation ever when it comes to spending their money.

According to research conducted by Morgan Stanley in 2015, 86% of Millennials said they are interested in socially responsible investing. Similarly, 86% of respondents in Deloitte’s Millennial Survey 2017 believe that the success of a firm should not be judged purely with regards to financial performance. A survey by Standard Life Investments (2016) shows that nearly 70% of 25–34-year-olds were concerned about social and environmental issues as much as returns when investing.

Its these investors that are bringing increased attention to sustainable, responsible and impact investing as many look to make money and do good, by seeking positive social and environmental impact alongside positive financial returns.

Overcoming the perception that positive change comes at the cost of performance.

Millennial interest in sustainable investing comes at a time of increasing evidence of the positive performance potential in these types of investments.

A 2015 study from the Institute for Sustainable Investing found that investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments, both on an absolute and a risk-adjusted basis, across asset classes and over time. An example of this in action are the findings of the Carbon Clean 200 report, Q3 2016, which ranks the largest publicly listed firms worldwide by their total clean energy revenues. The companies on the list were found to be outperform their more polluting counterparts by as much as three times.

The 2015 study showed a lower level of volatility for companies that score well on ESG, as they tend to be less vulnerable to negative headline risks, large-scale lawsuits or environmental risks. Another reason according to Bryce Doherty, UBS’s Head of Global Asset Management, is that “about 70–80 per cent of a company’s value is represented in non-financial data — the ESG data.” Using it gives you the complete picture of a company’s performance, making it a potentially better indicator of overall performance and risk.

Sustainable investing is part of a bigger movement

Today’s younger consumers now expect brands to go above and beyond when it comes to companies conducting their business in a sustainable and ethical. A new survey conducted by marketing research firm Toluna, shows that 50% of Millennials now actively seek out brands that align to their values. In fact, some reports suggest that 90 per cent of global consumers are now more likely to switch to a brand associated with a good cause.

When looking beyond at consumption behaviour, the rise of sustainable investing is not so surprising. The challenge this generation of ethically minded investors face is how to navigate the complex world of investing to find investments that align to their own personal values.

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