Not too long ago, any finance whiz worth their salt would’ve scoffed at the notion of harnessing investments for a meaningful impact.

Yet, the tides have turned.

The threads of profit and sustainability are so finely spun that ethical investing is practically synonymous with making a positive difference.

As economies continue to pivot towards a low-carbon future, investing in companies poised to combat climate change and tackle other pressing issues will go from a principled choice to a savvy one.

Understanding Sustainable Investing

At its core, investing is the straightforward act of acquiring assets that appreciate in value and yield returns over time.

Now, imagine this traditional concept of investing but with a conscious twist, acknowledging that environmental, social, and governance (ESG) factors are ingrained in the economy. That’s sustainable investing.

Think of it as an approach where capital becomes a force for fostering positive impact and upholding corporate governance without making financial trade-off.

How Investing in Sustainability Rakes in Profit

Can making money and doing good actually walk hand in hand? You bet.

No need to take my word for it, though. Just look at the numbers.

For starters, consider the study of 11,000 mutual funds conducted by Morgan Stanley Institute. It found that sustainable funds, compared to conventional ones, tend to carry less risk, particularly during periods of high market volatility.

That isn’t just a one-time thing, either. As supply chains got trickier and concerns about the environment and human rights got louder, businesses saw more reasons to hop on the ESG bandwagon.

Recent research from Morningstar backs this up, having found that nearly 80 percent of equity funds have consistently done better than traditional funds over the last ten years.

Granted, no investment is a guaranteed win. But the numbers tell a compelling story as to how socially responsible investments can not only hold their own but outperform non-ESG funds.

Incorporating Sustainable Investments into Your Portfolio

As rewarding as ESG investing can be, simply tossing your investment dollars into assets won’t magically pull in returns.

In navigating the complex realm of sustainable investing, adopting an informed approach is crucial. Rigorous research is non-negotiable when it comes to building out clear and objective strategies that are paramount for reaping rewards.

Sustainable Investing Strategies 

For those new to the green investing scene, mutual fund —especially exchange-traded fund (ETF)— serve as a solid starting point.

Certainly, open-ended funds have their merits. But let’s talk ETFs for a second. They come with reduced logistical burdens and less capital gains tax. Lower risk means a better chance of guarding against potential losses. Until you’re ready to leap into individual stocks, ETFs might just be the move.

A quick tip with mutual funds in general – not all of them will resonate with the personal values you hold dear. Clearly define the causes you want to support. Without a roadmap, you won’t be able to tell which companies to include or exclude from the portfolio.

Not a fan of industries like tobacco and alcohol? Check out iShares MSCI USA ESG Select ETF (SUSA).

Keen on backing wind power pioneers? First Trust Global Wind Energy ETF (FAN) might be up your alley.

Enthusiastic about investing in fixed-income families and underserved communities —embracing community investing, as they term it— the RBC BlueBay Access Capital Community Investment Fund is at your service.

You get the gist.

Now, here’s the kicker. There’s no guarantee that all the stocks in a fund are squeaky clean. Multiple companies have tried to game the system, inflating their financial performance under the context of ESG integration. 

Avoid falling prey to this so-called greenwashing trick by digging into stocks. Look at indices and lists that score organizations based on ESG criteria from a third-party perspective or delve into sustainability reports and disclosures.

Perhaps you aren’t all that keen on handling all the legwork yourself. No stress. Seek help. 

The traditional route — financial advisors — works. But also consider robo-advisors. These algorithm-powered consultants can tailor and manage portfolios based on individual goals and needs. Sure, they might lack that human touch, but still come at a fraction of the cost.

Bill of Rights for Sustainable Investors 

No matter how you choose to go about it, there’s a unique perk to investing sustainably: the chance to make a difference that goes beyond dollars and cents.

Now, let’s talk about two nature-given rights green investors can exercise to move the needle.

Proxy Voting: A Seat at the Table 

Watching from the sidelines becomes a missed opportunity as a shareholder. You now possess the right to exert influence.

Enter proxy votes—an opportunity to have a say in the investment decisions companies make. It’s like joining a board meeting minus the fancy boardroom.

Treat proxy voting as a ticket to voice your thoughts on specific issues or proposals, which is an integral aspect of shareholder engagement efforts.

Want more transparency? Your vote can make it happen. Keen on responsible business practices? Give your nod to push companies in the right direction.

In essence, proxy voting empowers investors to hold companies accountable for their sustainability endeavors and nudges them toward change. 

So, the next time that proxy ballot arrives in your inbox, give it a second look and make your voice count.

Impact Reports: Making Sure Actions Match Words

Getting companies to talk the talk is one thing; making sure they walk the walk is another. That’s where impact reports come into play. It’s an investor’s way of taking part in the dialogue that keeps companies in check for adhering to shareholder proposals.

These reports lay bare the changes that have occurred, measure progress, and pinpoint areas for improvement. By providing tangible results, impact reports take out the guesswork, giving investors a transparent view of the actual outcomes tied to their investments.

Soaring Toward a Sustainable Tomorrow 

Concluding our journey through the dynamic landscape of sustainable investing, let’s turn our attention to a standout player that embodies the essence of sustainability, not just in rhetoric but in practice.

Meet Nearthlab – a drone technology company garnering accolades for its significant contributions to sustainable practices, particularly within the field of infrastructure inspections.

Endorsed by Microsoft and showcased at COP28, the world’s largest climate summit, Nearthlab exemplifies the real-world impact of cutting-edge autonomous drone solutions across various sectors of renewable energy.

From wind and solar to pipelines and facility inspections, Nearthlab stands as a testament to the transformative potential of impact investing. 

For those seeking not just financial returns but a genuine contribution to a greener planet, Nearthlab quietly beckons for a closer look.

As our drones continue to navigate the skies with grace, seamlessly blending innovation with eco-conscious practices, we invite you to explore how Nearthlab could be a steadfast companion in your journey toward a more sustainable and environmentally responsible tomorrow.