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Sustainable Finance Power to the People!

The Impaakt Team

8 min Read Time | June 27th 2023

The financial world has been experiencing a noteworthy transformation, with “sustainable investment” garnering a significant amount of attention. This conscientious investment philosophy, which involves considering environmental and social issues, has seen a marked rise in popularity.

Both sustainable investments and ESG assets have been trending upward, as documented by the Global Sustainable Investment Alliance. In 2020, sustainable and ESG investments achieved a considerable 15% growth, pushing the total to an impressive $35 trillion. This represents about a third of all professionally managed assets in the five primary global markets. Assuming a moderated growth rate of 15%—just a third of the pace seen in the past five years, the industry’s assets are projected to exceed $50 trillion by 2025.

While both sustainable and ESG investing consider environmental and social factors, sustainable investing places a greater emphasis on making a positive impact and aligning investments with certain values, while ESG investing is more focused on how these factors impact the financial performance and risk profile of investments. Despite the marked growth and increased sophistication of sustainability data, as well as societal pressure for ethical business practices, a vital component is being overlooked: the end client.

As the sustainable and ESG investing landscape transforms, the voice of the end client is alarmingly absent from the discourse, mainly due to limited access and a lack of tools enabling meaningful participation.

Empowering Change: The Rise of Retail Investors

In the vast landscape of investing, retail investors - individuals like you and me who invest their personal funds - hold a significant place. While institutional investors may wield greater financial clout, retail investors collectively represent a substantial and ever-growing share of the market. Their investment choices can influence trends, sway stock prices, and signal shifts in societal values.

Several forces are fueling retail investors' growing interest in either sustainable or ESG investing. On the one side, the recognition that ESG factors can affect a company's financial performance is becoming more widespread. Issues like climate change, social inequality, and corporate governance can directly impact a company's profitability and longevity.

On the other, many retail investors are increasingly seeking to align their investments with their personal values. In a world confronted by various environmental and social challenges, they wish their investments to be part of the solution, not the problem. In other words, investors want to know what positive and negative contributions are their investments bringing to the world.

This convergence of financial insight and personal values is driving a notable demand for sustainable investments among retail investors. With ESG and impact data becoming more and more available, retail investors now have tools to make informed decisions based on a company's sustainability performance, thereby contributing to a more sustainable future while seeking profitable returns.

Democratising Sustainable Investing

In the digital age, online trading platforms have emerged as powerful tools that have revolutionised the investment landscape. They provide an accessible, user-friendly interface for buying and selling securities, offering an array of investment options at the tip of your fingers.

These platforms have played a crucial role in democratising investing, making it accessible to retail investors like never before. With just a few clicks, anyone can set up an account, learn about different investment options, and start investing - all from the comfort of their home.

The rise of online trading platforms has particular significance for sustainable investing. Retail investors can now easily access a wide range of sustainability-focused funds or stocks, learn about their performance, and read up on their practices. This means that retail investors can now more easily align their investment decisions with their values and environmental and/or social considerations.

A number of online trading platforms have risen to meet the growing demand for ESG investment options. For instance, platforms like E*TRADE and Charles Schwab offer ESG-focused mutual funds and ETFs. Robo-advisors like Betterment and Wealthsimple provide options for automatic investment in socially responsible portfolios. Additionally, for individuals interested in a more impact-focused tool for their investments as opposed to ESG and who want to navigate through the confusion and misinformation, Impaakt is the perfect fit. The platform can be used as a stand-alone or complementary tool to truly understand the social and environmental impact of the largest companies in the world.

Overall, the growth of sustainability and ESG investing among retail investors represents a significant shift in the world of finance. With the increasing accessibility provided by online trading platforms, retail investors are now more empowered than ever to invest their money sustainably, marking a positive step towards a better future for all.


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