CHALLENGE 15 – Sustainable Finances
Pretty Green - Eco Investments
The goal of challenge #15:
- Choose investment options based around sustainable funds
- Supporting Sustainable Development Goal 7
(Depending on where investments are involved, support can touch several other goals too. I highlighted clean energy as some of my chosen funds specifically mention clean energy investments)
Fumbling with financial planning
It’s a topic that few of us get excited about… pension planning! Yet it is generally considered as a sensible thing to do. Here’s the positive, it might not just beneficial for our individual selves; with a little thought and minimal effort contributions can make a big difference for others as well!
Did you know?
… There was a 34% increase in sustainable investments over two years between 2016 – 2018 across the five main financial markets, according to the Global Sustainable Investment Alliance.
What is sustainable investing?
Sustainable investing = directs investment capital to companies that seek to combat climate change, environmental destruction, while promoting corporate responsibility. Then you have Socially Responsible Investing (SRI) = involves investing in companies that promote ethical and socially conscious themes including environmental sustainability, social justice, and corporate ethics, and fight against gender and sexual discrimination.
Definitions by Investopedia
Up until now I had left my old-age provisions in the hands of my employers. For me it was enough to know I had monthly portions of my salary going into some abstract account I only ever considered when moving jobs. Other than that I gave very little thought as to where the money was, and what it was supporting over the decades until my retirement.
Fast-forward to 2019 where I decided to become self-employed. A very exciting endeavour and one with countless new considerations popping up on a weekly basis, taking sole responsibility for my pension planning being just one.
In the end, it was a lot more straight-forward than I thought, so I decided it could be worth sharing in one of my challenges. Being an absolute rookie in terms of financial planning, I am not going to call these tips, but here is what I did:
- Spoke to an independent insurance broker
- Looked into simple pension plans, then asked for more information on sustainable fund options. Currently many standard plans are not yet geared towards sustainable investments so you have to ask specifically for these types of plans.
- Invested time to look into the various portfolios on offer, and selected 5 funds myself that I liked the sound of and which reflected a balanced level of risk that I was personally comfortable with (If this sounds advanced to you …. it’s actually not as each fund has a risk rating). My selected funds support investments in the following areas: sustainable energy, recycling practices, health and social care, sanitation, education and employment, agriculture, housing and financial inclusion
- Chose an investment option that:
a) Consisted of ‘managed funds’ – meaning someone is paid to keep a watchful eye on the development of the fund components and will then move the money around to minimise risk and maximise growth.
b) Gave me flexibility to move my money into different funds on a regular basis if I want to.
That basically sums it up!
When signing up to these investments, we need to take into account that they are for the long-haul. I personally plan to leave things ticking along with little involvement from my side, but will bi-annually check the development of the funds and see that they maintain their eco-investment status, if not I will update my fund selection accordingly. I am aware of the fact that I am unlikely to have complete transparency over exactly where the money is invested, but will rely on the financial controls and standards in place that are responsible in auditing the integrity of sustainable and socially responsible funds. Here is a link from the European Commission on Green Finance, if you are interested in reading more.
How about if you are employed?
This post describes private investment options, so I did ask myself how I would approach the matter if I were to be employed. I believe it may still be worth while asking your relevant department contact or the company that runs your company pension plan about where money is invested. Whilst it is fair to assume that you cannot expect a direct change to happen, you are making an effort to start a conversation and challenging people to think about alternatives… imagine that in time, not just your pension, but all your fellow colleagues pensions would be directed towards environmentally or socially sustainable funds … thats impact!
Food for thought on meaningful money investments
In the uncertainty of todays world, financial and otherwise, what attracted me to choosing a sustainable pension plan, is the fact that regardless of how much or little is available when I do retire some day, at least I know that the modest and manageable sum I am putting in will be having a positive outcome whilst it waits for that day to arrive. I am going to finish this post up by highlighting that I am absolutely no expert on the matter and the notes here are based purely on my own choices and the research I have done. Please seek advice from a selection of sources and ask professionals, but do be sure to ask about sustainable investments as an option.
If you have any comments or suggestions, please write to me below.
Thanks for reading
Your Better Me Greener
Charlotte
