ESG, impact investing, sustainable investing, ethical investing and socially responsible investing; with so many terms, it can get confusing quickly. Ultimately, these approaches are often intertwined, but there are small nuances that we’ve outlined for you briefly below. Understanding the differences can help you decide what type of investment strategy you might want to ensure that your investments are not just performing financially but also adding value to society or the planet.
ESG stands for environmental, social and governance.
The E encompasses the effect that companies’ activities have on the environment, such as greenhouse gas emissions, water consumption, energy consumption or carbon footprint. The S stands for social: looking at and measuring the effect on society and the social implications of a company’s actions. Finally, G is about corporate governance, so things like the composition and diversity of its Board of Directors, transparency policies for its public information, or its codes of conduct, for example.
Companies use agreed-on criteria in each of the three areas to screen investments based on their corporate policies. The aim is to encourage companies to act responsibly. ESG criteria are also increasingly informing how investment options are built.
This is the practice of selecting investments based on ethical or moral principles. You tend to see ethical investors avoiding investments in companies running unfavourable activities such as gambling, alcohol, smoking or even firearms; these are often called “sin stocks.” Think about it as aligning your personal moral compass with your investment portfolio.
The one thing to remember with Ethical Investing is that it really depends on the person. What you might be okay with, someone else might not agree with. Therefore, it’s important to always consider any investment opportunities and ensure the investments you make align with the impact you’d like to have.
Community investing is a type of investing where the return is measured by community impact rather than monetary return. Both public and private investment is focused on providing support to low-income or other underserved communities with capital, credit, training and other support these groups may otherwise lack.
Sustainable Investing (SI)
Sustainable investing has widely been recognised as the fastest-growing segment in the investment world. SI often goes hand in hand with SRI (Socially Responsible Investing), but SI is more about focusing on providing support for the environment. Funding in sustainable investing is, for example, supporting efforts to reduce the effects of global warming.
Also known as eco-investing, this is about investing in companies that support or provide environmentally friendly products and practices.
Socially Responsible Investing (SRI)
Socially Responsible Investing is the sister to SI (Sustainable Investing) but has a slightly different focus. With SRI, it’s about making investments that have the potential to help nations, companies and societies to develop, innovate and grow. Think about SRI as investing in people and society. The benefit here is that you’re investing in your own future and in positive change and progress too.
Impact investing is an investment strategy that combines financial returns with the pursuit of positive change in the world. With impact investing, positive outcomes are of the utmost importance – meaning the investments need to produce a tangible social good. Social good is defined as actions that benefit the largest number of people in the most significant possible way, such as clean air, clean water, healthcare and literacy. Think about it as activities that support the “common good” and impact a large number of us. Impact investing will have an objective of using the investment money to drive wide-reaching but specific goals beneficial to society or the environment, such as clean energy. Socially responsible (SRI) and environmental, social, and governance (ESG) investing are two approaches used in impact investing.
Because all these approaches tend toward the same goal of creating a positive impact through thoughtful and intentional investment, there isn’t much difference between many of these terms and therefore, they are often used interchangeably. Nonetheless, the way in which different investment opportunities accomplish this can vary greatly.
At Allbricks, our purpose is to bring more stability, comfort and freedom into the world. We just happen to deliver it in a package called a home. We have the vision to ensure that wealth creation through residential property is available to more people than ever before while at the same time making homeownership more accessible.
Our mission, or in other words, how we plan on doing that, is to enable more people to buy a home by providing socially responsible property investment that positively impacts our society. Having a safe home creates stability which is a foundational building block for positive growth. As our company grows, we hope to bring Allbricks to all parts of the world and enable people across the globe to finally know what it means to be part of the property marketplace.
We believe in ethical investment. Allbricks was formed on the vision of taking a broken system and fixing it from the ground up. To help level the playing field for those who, just by virtue of being born too late, have been too far away from stepping onto the property ladder or reaping the rewards from property investment. We have focused on fixing a broken mortgage system and ensuring that we create a more democratic approach for those who can participate in property investing. At every opportunity, we built a solution that was fair to everyone, from shared costs to shared responsibilities.
If you believe in building communities, enabling individuals and families to buy homes near their parents, allowing children to stay in their schools and by their friends while still investing in your own future, then it’s time to become part of the Allbricks investor community.
The first step is registering your account here.