Sustainable Investing Implementation Sustainable Investing Implementation Sustainable Investing Implementation

Sustainable Investing Implementation

Education

Saxo Group

Implementation alternatives 

Individuals, governments and societies want corporations to behave in more ethical and sustainable ways. The rise in popularity of sustainable investing products shows that many investors feel the same way. It’s important to keep in mind that not all sustainable investing products are the same. There are many ways to implement a sustainable investing strategy. These include Socially Responsible Investing (SRI), Environmental, Social and Governance (ESG) investing and Impact Investing. 

Socially Responsible Investing ESG InvestingImpact Investing
StrategyEliminate companies with involvement in undesirable industries.Invest in companies with superior or improving ESG practices.Invest in specific sustainable investments
Market coverageTargeted industries excludedIndustries may or may not be excludedLimited
ImpactIndirectIndirectTargeted and direct
ReturnsMarketMarketAt or below market
Socially Responsible Investing 

Socially responsible investing (SRI) is a type of sustainable investing that excludes investments of companies’ that fail to meet an environmental, social and/or governance standard. SRI portfolios are often referred to as “sin-free” portfolios. There are many types of business activities that could be considered for exclusion. These activities include the production and distribution of adult entertainment, alcohol, military weapons, controversial weapons, fossil fuels, gambling, palm oil, tobacco and many others. The list of excluded investment is unique to each investor or investment product. If you buy an SRI ETF or mutual fund, the types of investments excluded may or may not match your preferred list of exclusions. 

ESG 

The term ESG means Environmental, Social and Governance, but also refers to a number of sustainable investing strategies. These strategies attempt to pick investments of companies whose ESG practices are above average or whose ESG practices are improving. Best-in-class, tilting and thematic focus are among the subcategories. Keep in mind these subcategories are not mutually exclusive. 

Best in class 

This type of ESG implementation attempts to pick companies with the best ESG metrics. One way of doing so is to pick the best companies within each industry. In this case, industries that are excluded from SRI investing are included, but only those with the best characteristics are included. Another way of implementing this strategy is to pick only companies with minimum ESG scores or potential for improvement. In this case, there may be some industries where no companies make the cut. 

Tilting 

This type of ESG implementation overweights investments with high ESG metrics and underweights investments with low ESG metrics. Every investment in the market capitalization weighted benchmark is held, but weights are changed to reflect ESG metrics. 

Thematic focus 

This type of ESG implementation focuses on a particular component of ESG, Environmental, Social or Governance. 

Impact Investing 

Impact investing attempts to make a positive, measurable social and environmental impact along with financial returns. At times there can be a tradeoff between the environmental or social impact and the financial return, which means financial returns can be lower than that of the other types of investments. Investments are often in specific projects, such as a water sanitation project or a company developing an environmentally friendly technology. In this way, impact investing can be thought of as environmental and social venture capital. 

Global resources 

The United Nations (UN), the Organization for Economic Cooperation and Development (OECD) and the International Labour Organization (ILO) provide guidelines, norms and additional resources. 
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.