GreenVesting, namely Green investing, represent an opportunity for private individuals and their venture capital and, at the same time, are a tool for enhancing and protecting our environment.
The environmental impact brought about by the careless management of the Earth’s resources has rightly emerged as an issue in several sectors: the productive and the financial especially. And to stop climate change, ethically sustainable choices, renewable energy sources are being used.
This is why Europe has established the European Green Deal, for which the European Commission has made a commitment to allocate as much as 1 trillion euros, over the next 10 years, for sustainable investments.
To achieve this goal, the European Commission has established EGDIP, the European Green Deal investment plan.
GreenVesting in the green economy, what does it mean?
It is in such a context that the possibility, also by private individuals and not only by funds, to invest in green should be placed. In fact, it turns out that ESG investments are on the rise. The acronym ESG stands for Environmental, Social and Governance, and indicates the set of activities of a company that must take into account:
- environmental scope and impact in its choices;
- social aspect in its strategies;
- corporate management inspired by ethical principles and good practices.
Sustainable and Responsible Investment (SRI)
However, it is possible to refer to a second acronym: SRI, Sustainable and Responsible Investment. In this second case, not much different from ESG investments, one certainly aims to create value for investors and companies, and does so through:
- a medium- to long-term investment strategy;
- an environmental, financial, social and good governance analysis when evaluating companies to invest in.
SRI investments can therefore be implemented taking into account different strategic approaches. Often, 6 strategies are usually applied:
- exclusions of investments in areas such as arms, animal testing and tobacco;
- international conventions whose compliance is sought. Conventions of UN agencies such as UNICEF or UNHCR;
- best in class, an approach according to which the different issuers in the portfolio are chosen with criteria related precisely to the environment, social and governance;
- thematic investments, so as to invest by focusing on one or more themes. Such as, for example, renewable sources;
- engagement, i.e., the activity of dialogue between investors and the financed company regarding issues related to sustainability;
- impact investments that aim to create a positive social and environmental impact. An impact that is also measurable and generates ROI (return on investment).
Examples of green economy investments
There are several investment opportunities that the green economy offers to those who want to commit venture capital.
One can point to green bonds. These are financial instruments that have been showing strong growth since 2007. In practice they are bonds in their own right (debt securities issued against the payment of capital) and their issuance is for projects with a positive environmental impact:
- energy efficiency projects;
- energy production from renewable sources;
- sustainable land use;
- waste and water treatment;
- pollution prevention and control;
- eco-friendly construction.
Initially, green bonds were issued by supranational financial institutions (European Investment Bank, World Bank). Now they can also be issued by companies, state agencies and municipalities.