Nowadays, taking a decision on investments, we increasingly more think not only about ourselves and the welfare of our family, but also about clean and safe environment. Socially responsible investments is a trend, which becomes popular worldwide very fast, helping to influence our welfare, therefore investors more and more choose to invest in the companies that are environmentally friendly, promote protection of consumes, human rights and development of the society in general.
Choosing socially responsible investments, responsible investors avoid the manufacturers of tobacco and alcohol, or gambling industry, weapons and fossil fuels. This is an approach that is directed towards future, organizing the Environmental, social and corporate governance (ESG) in the largest companies in the world.
“Any decision on investments should be well considered and correctly elaborated. To split the risks, a diversified portfolio shall be formed, which allows to avoid concentrated investment of funds in one region, one financial instrument or one asset class", states Anzelika Dobrovolska Head of Nordea Investment Product and Service Development for the Baltic countries.
What is a correct way of distributing your money?
The structure of an optimized portfolio helps to ensure the optimal risk and profitability ratio; therefore the correct way of distributing your finances is one of the most important decisions in financial planning. We at Nordea advise splitting your funds into three parts:
Socially responsible investment incentive
Despite the fact that climate and environment investments are highly concentrated and are recommended for use as a small part of portfolio, the investment incentives demonstrate that these solutions can help in using of market possibilities that are not yet explored and earning a desirable profit. Socially responsible investments have a number of incentives:
“Climate and environment as an investment pattern is a fundamentally growing tendency in a long-term perspective. Currently many climate solutions have reached the economic break point and their influence over a company’s cash flow is not still clearly understood, therefore, investing in companies which gain directly from climate and environmental solutions implies ample opportunities for profit where the others do not see any potential”, states Anzelika Dobrovolska.
Possibilities of climate solutions
For example, Nordea Climate and environmental investments basket consists of about 1000 enterprises, which market capitalization exceeds 5 trillion EUR. To make the offer more obvious, the climate solutions can be divided into three groups of investments:
Why choosing socially responsible investments? It allows joining the market segment with a very strong growth percentage and using the potential of underresearched and contradictory sphere, at the same time making the money work for you and for the society. This is a type of thinking that contributes to the growth of competitiveness, helps to attract higher investments and makes positive changes in improving the environment.
REMARK
The historical profitability of the securities mentioned herein is for information purposes only. The historical profitability cannot be considered as a reliable index of future investment results – their actual return can differ significantly from the figures mentioned herein. This information should not be perceived as an investment consultation or an invitation for a financial instrument transaction. Please carefully read the regulations and terms and conditions for every specific investment product prior to taking a decision in relation to investing and evaluate it in terms of matching your investment portfolio, your interests and your risk profile. Nordea will not be held liable for any loss that a customer may incur by relying upon the information contained herein.