There are several distinct approaches to sustainable investing. These tools function most effectively in combination rather than in isolation.
Divestment - Selling off shares in high-carbon industries (fossil fuels, heavy emitters) to reduce financial exposure and express disapproval.
Active Ownership - Holding company shares, including high-emissions firms, to influence direction via shareholder resolutions and management engagement.
Best-in-Class Investing - Selecting the most sustainability-forward companies within each industry rather than excluding entire sectors.
Thematic Investing - Targeting companies specifically addressing sustainability challenges, such as clean energy and electric vehicle manufacturers.
Net-Zero-Aligned Portfolios - Only including companies meeting 1.5°C warming targets, excluding those failing emissions reduction criteria.
Impact Investing - Directly funding sustainable solutions through private investments like angel and venture capital in clean energy and climate technology.
Climate-Linked Financial Products - Instruments such as green bonds and sustainability-linked loans that finance sustainable projects.
ESG Investing - Selecting companies effectively managing environmental, social, and governance risks, prioritizing those better positioned for future challenges.
