Skip to Main Content
What are sustainable investments?
What are sustainable investments?
02 May 2022#Sustainability

What are sustainable investments?

It is now clear that climate change has become a reality, as evidenced by the intensification of extreme events, which are increasingly in the news. Sustainability is now fundamental, a central element of the economic policies of governments around the world.

The dictionary of environmental and social sustainability is getting richer and richer, and we often hear about new words and acronyms like SDGs or ESGs. But what exactly are they all about?

What are the Sustainable Development Goals (SDGs)?

We also often hear about SDGs (Sustainable Development Goals) but what are they?

Their birth dates back to 2015, they are common goals that the international community (all 193 member countries of the UN) has given itself to promote the sustainable development of the planet.

There are 17 of them, divided into 169 specific "goals" to be achieved by 2030. They belong to all countries and individuals in the world and have been adopted by all those involved in "development" in the broadest sense: development cooperation, but also development of their own communities, economic and social development and environmental sustainability.

UN Agenda 2030

What does ESG mean?

Environment, society and governance: from these three pillars comes the acronym ESG (Environmental, Social and Governance), used in the economic sphere, which encompasses three areas of attention for making sustainable investments.

The first pillar - the environment - mainly concerns issues related to reducing pollution, combating climate change and making better use of natural resources. The second - society - concerns gender policies, human rights, labor standards and the relationship between the business world and the context in which it operates. The third - governance - concerns the good practices of corporate governance and the virtuous behaviors of companies in terms of compliance with laws and ethics.

The ever-growing ESG investment market enables the strengthening of sustainable development and can become a key ally in the fight against climate change.

But what are sustainable investments and how exactly do they work? Let's find out together!

Sustainable investments and the benefits of investing in ESG funds

Sustainable and responsible investments refer to purchases that aim to make a profit, taking into account environmental and social elements.

They are characterized by a deliberate choice to invest in assets that pay attention to these issues. In fact, investing in ESG funds means contributing with one's savings to sustainable and environmentally friendly development.

What benefits?

The environmental theme is achieving significant performance thanks to the support of multiple factors such as renewed efforts by individual governments and the European Union, including the Green Deal, increased attention from investors and market intermediaries, as well as from consumers and end customers. For this reason, there is an increasing positive trend in the returns of investments in ESG funds, a trend that is dispelling the myths about the returns of this type of asset, long viewed with suspicion from a performance perspective.

At the same time, ESG indices not only performed better on average, but also had lower risk.

Sustainability at Banca Generali

Investing in sustainability: Banca Generali, in line with its innovation path, has developed an approach aimed at promoting investments that integrate environmental, social and good governance (ESG) factors. Specifically, sustainable investment strategies and portfolios are proposed with the aim of taking into account the different sensitivities and preferences of clients, including in ESG areas and with an approach based on adherence to the "Sustainable Development Goals" (SDGs) promoted by the United Nations.

Banca Generali is constantly integrating its offer guided also by the principles of responsible investment, contemplating ESG strategies with a focus on trends such as circular economy, sustainable and medical technology, new communication methods and impact approaches.

ESG Platform

With the support of Mainstreet Partnersa London-based company specializing in advisory on sustainable investments, Banca Generali has developed a proprietary platform capable of detecting the level of sustainability of the various investment solutions, and of calculating the impact on the individual SDGs, "physicalising" the positive contribution through the use of specific metrics.

The portfolio management service has also been enhanced with new management lines, some of which have a clear sustainable orientation. An example of this are the dedicated BG Solution and BG Solution Top Client lines, characterized by investment strategies and management policies that integrate the search for traditional financial returns with social, environmental and good governance parameters aligned with the United Nations Sustainable Development Goals as well as the most authoritative international frameworks in the field of sustainability reporting and rating.

Our Deputy General Manager Andrea Ragaini interviews Joe Colombano and Rodolfo Fracassi