Sustainable finance has emerged as one of the most promising and optimistic trends in the finance sector. It is said to be playing a key role in shaping our society’s future by combining financial goals with socially responsible behavior . Where some investors are showing concern for the environment, they are worried about the effects of certain products on the society. Even though the vision of responsible investment varies to a great extent, the end result is the same.
The concept of “Double Bottom Line” is one of the main causes of why many investors are uncertain about recognizing sustainable finance. According to them, combining financial goals and social responsibility requires additional investment. However, if recent studies are to be believed, socially responsible mutual funds and indexes have showed outstanding performance through the years. This establishes the fact that you don’t need to compromise on profit making if you make responsible investments. In recent years, several major investment and commercial banks have also started taking social and environmental concerns into consideration for business. Even their stakeholders are of the view that investors should demonstrate more responsibility towards the businesses they are financing.
Sustainable finance has been considered vital for the accurate transaction management and portfolio of any company. Even though several investors are addressing sustainability and environmental impacts of their operations, a lot more still needs to be done. Sustainable finance needs to be implemented especially in affected environments and communities. Financiers must adopt more than just good intentions. They must follow strong policies that have been applied across all departments and practice leadership in their sector and society, respectively.
During the 1990s, UNEP Finance initiative was launched by the United Nations Environment Program. This global partnership of 170 finance companies and UNEP was targeted towards a better understanding of the environmental and social aspect of financial performance. In a nutshell, efforts are being made globally to embrace a modern approach instead of the traditional investment policies. Even though the rate of socially responsible investments is relatively small, it is becoming more influential. It is essential to make more investors aware of integrating social concerns when making investments.
Kevin Long is the founder of Global Deaf Connection and the co-founder of Justmeans, a social utility site ( http://www.justmeans.com/ ) that helps companies to attract and ignite advocates of better business. Kevin has done significant business development work for both for-profit and non-profit organizations that support good work.