SGI Applauds Regenerative Investment
What is Regenerative Investment?
Regenerative investment is an investment that regenerates and gives back to the system it is serving, thus enabling sustainable economic growth. Regenerative investment balances traditional investment with environmental, social, and governance-related (ESG) insights to improve financial outcomes. Traditional investing is transforming investor capital into investment opportunities with competitive returns regardless of environmental, social, and governance factors.
Regenerative investing is about investing in progress and recognizing that those who are working to solve the world’s biggest problems have the greatest potential for growth. It is about the evolution of conducting business and encouraging people to build a better future. Regenerative investment is about challenging the status quo and building the institutional framework to include businesses that have been excluded from the traditional economy. It also has a moral element as positive social change is considered for investment decisions.
Regenerative investment does not shy away from traditional investment. Instead, it improves it by applying ESG perspectives. Regenerative investment conducts positive and negative screens to determine if investments should be made for certain businesses. According to SP Global, important qualifications for regenerative investment are that companies adhere to sustainable practices including environmental stewardship, consumer protection, human rights, and racial and gender diversity. Assets using regenerative investment strategies have seen successful growth in recent years and have continued their momentum.
Why is Regenerative Investment on the Rise?
Leaders in finance are increasingly becoming interested in companies with more sustainable investment practices. Governments are also seeking out solutions towards integrating sustainability into their investment decisions. Using ESG factors for investment decisions is becoming more accepted. One of the most popular forms of sustainable investing is choosing not to invest in companies based on their business line solely. Additionally, there is a greater awareness of the impact of ESG research and analysis and its ability to identify investment strategies to generate excess returns.
What are the Types of Regenerative Investment?
Regenerative investments are judged by criteria using ESG standards for company operations. Socially conscious investors look for companies with business practices that meet ESG standards. Investment firms are increasingly keeping track of their progress as they rise in popularity and favor to allow various options for investors. One manner of regenerative investment takes the form of green stocks. They are becoming even more in demand due to expanding climate awareness, innovative technologies, and the decreasing costs of green technology. Another form of regenerative investment are projects that are funded by green bonds. These projects are typically focused on energy efficiency, pollution reduction, transportation, and advanced green technology. There are also ETF or exchange-traded funds, which are investment funds that can be traded on stock exchanges, much like stocks are traded from traditional investments.
Lastly, hedge fund managers are prioritizing ESG investments with ESG criteria that meet corporate values and sustainability goals. Regenerative investment is leading the way in how sustainable practices can be incorporated into investors’ decision-making and strategy. Such investments are essential in our efforts to build an economy that respects and preserves our ecosystems. Moving towards a socially responsible future with regenerative investment can generate sustainable economic growth so that more people can live freely and thrive in a healthy environment.
Works Cited:
Golka, P. (2020, June 10). Sustainable Investing vs Impact Investing: What’s the Difference? Transformation Holdings. https://www.transformationholdings.com/impact-investing/sustainable-investing-vs-impact-investing/
Sustainable Investing & Investment Management. (n.d.). CFA Institute. Retrieved July 14, 2021, from https://www.cfainstitute.org/en/research/esg-investing/sustainable-investing
What is sustainable investing? (n.d.). BlackRock. Retrieved July 14, 2021, from https://www.blackrock.com/us/individual/investment-ideas/sustainable-investing
What is the difference between ESG investing and socially responsible investing? (n.d.). Retrieved July 14, 2021, from https://www.spglobal.com/en/research-insights/articles/what-is-the-difference-between-esg-investing-and-socially-responsible-investing