What is sustainable investing?

Prepare for the GARP Sustainability and Climate Risk Exam. Study with flashcards and multiple choice questions, each question includes hints and explanations. Gear up for success with our materials!

Sustainable investing is defined as an investment approach that integrates environmental, social, and governance (ESG) factors alongside traditional financial analysis in order to capture long-term value. This practice acknowledges that financial performance is interlinked with the broader impact of investments on society and the environment. By considering ESG factors, investors aim to identify companies that are not only financially sound but also responsible in their operations, sustainability practices, and social contribution.

This approach reflects a growing recognition that sustainability can influence risk and return profiles and that businesses that manage their ESG factors effectively may be positioned for better long-term performance. By taking into account sustainability issues, investors can stay aligned with societal values and contribute positively to the world while also aiming to achieve financial gains. This dual focus enhances the potential for better risk management and creates opportunities in markets increasingly driven by sustainability trends.

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