In a world where finance and ethics sometimes seem to be at war, one concept is changing preconceived notions and gaining popularity among individuals and professionals alike: responsible investing. Beyond numbers and dividends, it's about contributing, through ethical investment, to a more sustainable economy that respects the environment and society. But how to navigate this landscape of responsible investing? How do you distinguish between different labels such as SRI, ESG or Finansol, and what is the real impact of ethical investment on individuals?
The basics of responsible investing
Responsible investing is not just a fashion trend, but a structured and controlled approach to finances. It means choosing to invest in companies and projects that respect ethical, environmental and social principles. This approach helps to combine economic performance with social responsibility and environmental issues, creating an investment portfolio that becomes an instrument of change, encouraging responsible practices and sustainable development.
This investment strategy goes beyond financial returns and incorporates environmental, social and governance (ESG) criteria. Investments are channelled into companies and projects that fulfil these criteria in order to create more sustainable and equitable economic development. It is important that responsible investors inform themselves, understand and evaluate the companies in which they invest, making informed and ethical decisions.
Signs and labels for responsible investing
When you decide to invest responsibly, it is important to understand the signs and labels that will help you identify that investment. These marks ensure that the company or fund meets established standards and criteria for social responsibility and sustainability:
ESG Mark: ESG is not just a label, but an approach to investing that considers three key factors: environmental performance (E), social responsibility (S) and governance quality (G). These factors are essential for assessing a company's long-term performance;
SRI label: Created by the Ministry of Economy and Finance in 2016, the SRI (Socially Responsible Investment) label promotes investment practices that take environmental, social and governance issues into account, along with financial profitability. From 2020, it also covers alternative and property funds;
FIR (Forum for Responsible Investment): FIR brings together all actors related to responsible investment, including investors, financial intermediaries, trade unions and associations. This forum promotes dialogue between companies and investors on sustainability issues;
Finansol label: This French label was created in 1997 and guarantees that the money invested in a product is used to finance socially and environmentally relevant projects.
Benefits of responsible investing
Responsible investing offers more than just the satisfaction of knowing that you are contributing to a better world. Companies with environmentally friendly practices and socially responsible policies tend to perform better over the long term. They are better at predicting risk, optimising their resources and have a better public image, which can lead to better stock market performance. By choosing responsible investing, you help reduce your environmental footprint and promote social good.
Responsible investing also supports sustainable development and encourages ethical business practices. Your investment choices can encourage companies to adopt more ethical practices, which has a positive impact on their reputation and financial success. By directing your funds to companies that care about minimising their carbon footprint, respecting workers' rights and contributing to society, you are helping to create a greener and fairer world.
ESG and SRI's core principles and approaches to responsible investing
An ESG fund is an investment fund that selects its assets based on criteria such as environmental impact, social commitment and quality of management. ESG funds play an important role in responsible investing by providing an opportunity to invest in companies that are both financially successful and adhere to environmental and social standards. It is important to choose funds that are explicitly labelled as ESG and to monitor their transparency and regular ESG impact reports.
ESG and SRI are two approaches to responsible investing that integrate environmental, social and governance aspects into their solutions. The difference between them lies in the methodology: ESG focuses on evaluating companies against these indicators, while SRI goes further by emphasising active investment decisions in favour of responsible companies. These approaches allow investors to make decisions that take into account both financial performance and environmental and social impact.
The Principles for Responsible Investment (PRI) were developed by the UN and signed by more than 2,000 investors worldwide. These principles include incorporating sustainability into investment analysis and shareholder policy, requiring companies to publish data on these issues, and engaging with asset managers and continually reporting on the implementation of these principles.
Conclusion: Invest wisely
In short, responsible investing is more than just choosing ethical investments: it's a commitment to a better world. By choosing funds labelled responsible investing, such as ESG or SRI, you can align your personal beliefs about sustainability with your investment strategy. This shareholder activism also encourages players in the financial sector (asset management companies, insurance companies, etc.) to adopt best practices to promote sustainability.
Met Sorrows
Legal expert with 30 years of experience.