Sustainable investment: what is it and how does it work?

Understand more about the importance of sustainable investment

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Sustainable investment has been a very relevant topic in recent years.

In fact, with each passing day, the concept of sustainability has gained more and more space in various aspects of life in society and, now, it has also reached the world of business and investments.

For this reason, applications that fit into this type of investment are also growing.

But what is this? How important is sustainable investment?

If you want to know more about it, read on. We'll explain how it all works.

What is sustainable investment?

Sustainable investment represents the financial contribution to companies that adopt good sustainability practices.

In other words, it means investing in and recognizing companies that solve challenges related to nature and social issues.

By making the financial market more adept at sustainability actions, it is not just the environment that can benefit.

Furthermore, investors can find applications that are more suited to their personal values and thus obtain good financial returns through this type of investment.

Therefore, we can define sustainable investments as those that are made considering environmental and social sustainability criteria.

Typically, the acronym ESG is used to describe environmental, social and corporate governance criteria.

In fact, B3 itself, which is the Brazilian stock exchange, has the Corporate Sustainability Index (ISE).

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What is the Corporate Sustainability Index (ISE)?

The Corporate Sustainability Index (ISE) emerged in Brazil as a way to monitor and encourage a more sustainable stance by companies.

Through it, it becomes possible to know which organizations are truly committed to environmental, social and governance issues, the so-called ESG issues.

Understanding what sustainable investment is is only part of the concern. The other part is related to identifying these applications.

And this is one of the reasons why the ISE is useful, since this index is made up of shares from companies committed to ESG issues.

From an investor's point of view, being interested in companies that are committed to these issues is, in fact, very advantageous.

After all, we are talking about good stocks to acquire, as the companies in these titles comply with the requirements of good environmental and social management.

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How do sustainable investments work?

It is possible to use sustainable investment as a way of choosing assets and financial products in the market.

The relationship between the financial market and ESG requirements creates several investment alternatives focused on sustainability.

An investment of this type involves organizations that are focused on making profits, but in a sustainable way.

To help you better understand this subject, we will give you an example.

Think of an investor who is very committed to animal welfare and rights issues.

So that he can invest, but without giving up his values, he can make investments in companies that They do not test on animals (cruelty-free).

The first step, in this case, is to choose assets from companies that have values aligned with yours.

This way, he can acquire shares or ETFs (Exchange Traded Funds).

Why is it important to seek sustainable investments for your portfolio?

There has never been so much talk about sustainability and preservation.

People are increasingly concerned about these issues. For this reason, companies will need to comply with this requirement.

Otherwise, they may lose consumers who prefer to purchase products and services from companies more committed to social and environmental issues.

Furthermore, opting for sustainable investments results in excellent benefits not only for you or your financial assets.

When you invest in companies that have sustainability as a value and principle, you encourage environmental care, good management practices and social responsibility.

It is also important to mention the fact that when a company establishes itself as a sustainable option, the chances of shareholders obtaining positive results increase considerably.

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Sustainable investment alternatives

To help you, we will show you some possibilities of assets that can be considered sustainable investments.

See some types of investments that are ESG:

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Sustainable funds

Examples of ESG funds:

• Abradinvest Golden Share BDR Level I FIA
• Now Top Green index
• Allocc FIC FIA Shares
• Allocc FIC FIA Shares
• BNP Paribas Blackrock ESG Strategies FIA IE
• Bogari Value FIC FIA
• Brazil Capital Sustainability Advisory FIC FIA
• BTG Absolute Institutional FIC FIA
• Itaú International ESG Portfolio
• CSHG Allocation Velt 90 FIC FIA
• Fame Shares FIC FIA
• Itaú ESG Clean Energy Shares
• Itaú ESG H2O Shares
• NAU Capital Impact FIQ of FIA
• Porto Seguro Selects FIC Shares
• Harvest ESG Impact
• Santander FIC FI Ethical Shares
• Sharp Equity Value Feeder FIC FIA

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ETFs

ETF is the acronym in English for Exchange Traded Fund, which can be freely translated as a fund traded on the stock exchange.

These are passive investment funds in which profitability is linked to the replication of some index.

Here are some examples of ESG-focused ETFs that take sustainability and governance principles seriously:

• ETF GOVE11 which has the IGCT index as a benchmark
• ECOO11 ETF which has the ICO2 index as a benchmark
• ETF ISUS11 which has the ISE index as a benchmark

Source: Active Investments

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Which companies are listed on the ISE of the Stock Exchange?

As you already know, the ISE plays an essential role in measuring ESG issues, both for companies and investors.

Currently, there are 39 companies that make up the Sustainability Index.

Find out what they are and their respective tickers (trading codes) on the stock exchange:

• AES Tiete (AESB3)
• B2W (BTOW3)
• Bank of Brazil (BBAS3)
• Bradesco (BBDC4)
• BRF (BRFS3)
• BTG (BPAC11)
• CCR (CCRO3)
• Cemig (CMIG4)
• Sky (CIEL3)
• Copel (CPLE6)
• Cosan (CSAN3)
• CPFL (CPFE3)
• Duratex (DTEX3)
• Eco-Roads (ECOR3)
• EDP (ENBR3)
• Eletrobras (ELET6)
• Engie (EGIE3)
• Fleury (FLRY3)
• GPA (PCAR3)
• Itau Unibanco (ITUB4)
• Itausa (ITSA4)
• Klabin (KLBN4)
• Light (LIGT3)
• American Stores (LAME4)
• Renner Stores (LREN3)
• M. Dias Branco (MDIA3)
• Marfrig (MRFG3)
• Minerva (BEEF3)
• Moved (MOVI3)
• MRV (MRVE3)
• Natura (NTCO3)
• Neoenergia (NEOE3)
• Petrobras Distributor (BRDT3)
• Petrobras (PETR4)
• Santander (BCSA34)
• Suzano (SUZB3)
• Telefonica (TLNC34)
• TIM (TIMS3)
• Weg (WEGE3)

Source: Vexter Blog

Conclusion

Sustainable investments are essential to creating a successful portfolio.

Now that you know the main types of sustainable investments, it will be easier to make good choices.