Responsible investing: Profitability and values for a sustainable future

Responsible investment is more than just a trend: it's an essential approach to reconciling positive impact and financial performance. At a time when environmental, social and governance (ESG) issues are becoming increasingly important, investors are turning to solutions that are both ethical and profitable. These choices give real meaning to their investments and also support innovative initiatives.

All investments carry risks, including total loss of capital. Before committing yourself, make sure you fully understand these risks and consult an expert to assess the implications of your financial choices.

Responsible investment is based on ESG (Environmental, Social and Governance) criteria, which make it possible to assess the overall impact of a company or project. Here are the main advantages.

A positive impact on society and the environment

Investing in responsible initiatives helps to finance projects that promote the ecological transition, reduce inequalities or enhance the well-being of local communities. For example, investing in a renewable energy project or supporting SMEs committed to sustainable development.

Profitable performance over the long term

Companies that integrate sustainable practices tend to be more resilient in the face of crises. What's more, the growing demand for responsible investment solutions is creating significant growth opportunities.

Diversify your portfolio with sustainable assets

Responsible investment provides access to a variety of assets, from renewable energy and green infrastructure to positive-impact companies. This diversification offers not only better risk management, but also return prospects in line with tomorrow's economic trends.

Before investing, it is essential to fully understand the associated risks. Even when investing responsibly, market fluctuations, partial or total loss of capital and underperformance can occur. It is advisable to consult a professional to assess whether this type of investment corresponds to your objectives and risk profile.

Responsible investment is booming, thanks to a growing awareness of environmental and social issues. This development is accompanied by new opportunities to reconcile financial performance with a contribution to projects with a positive impact.

Identifying responsible investment opportunities

SRI (socially responsible investment) funds: These funds select assets on the basis of ESG criteria while aiming for financial performance. By choosing an SRI fund, you are helping to support companies that integrate sustainable development objectives into their strategy. However, SRI funds entail risks, particularly linked to market volatility, the interpretation and implementation of ESG criteria, and the variable performance of the companies invested in.

Responsible life insurance: This offers a flexible and diversified solution for ethical investment. Life insurance policies offer SRI funds or unit-linked products focused on sustainable projects, making it possible to combine asset management with positive impact. However, it is essential to check the fees and ESG criteria associated with each fund.

Private equity : private equity, involves financing unlisted companies with strong growth potential. By supporting committed SMEs, you contribute to the real economy while enjoying an attractive return. The private equity funds, like those offered by Eurazeo Wealth Solutions, focus on innovative companies. It is important to note that there are risks associated with this type of investment, including limited liquidity and the potential for losses if the company fails to meet its growth targets.

Private debt: This form of financing makes it possible to lend directly to companies or projects that integrate ESG (Environmental, Social and Governance) criteria. It can offer attractive returns while supporting sustainable initiatives, such as ecological transition or local development. However, it does entail risks, particularly in terms of project performance, credit and liquidity, which need to be carefully assessed.

Green bonds : These instruments can be used to finance environmental projects such as green infrastructure or renewable energy programmes, and offer a way of supporting the green transition while generating returns. However, they carry risks linked to the performance of the projects financed and changes in environmental policies. In addition, like all bonds, they are subject to interest rate and credit risks.

Analysing ESG criteria

Companies and projects must meet clear ESG standards:

• Environmental: management of CO2 emissions, responsible use of natural resources.

• Social: respect for employees' rights, combating discrimination.

• Governance: financial transparency, ethical business practices.

ESG criteria are used to assess the environmental and social impact of companies, while measuring their potential to create sustainable value over the long term.

Diversifying your investments

To minimise risk, we recommend that you diversify your investments across different asset classes and business sectors. Diversification not only makes it possible to limit the risks associated with a specific sector, but also to optimise the potential return on your portfolio as a whole. By including responsible investments, you can combine financial security with a positive impact on the environment and society.

Discover several options for diversifying your investments:

• Invest in an innovative start-up: Start-ups focused on green technology or the circular economy represent promising opportunities.

• Supporting a local SME: Investing in local SMEs helps to boost the local economy while supporting companies that respect ESG criteria. This has a direct impact on the community while creating long-term value.

• Invest in a sustainable project: Contributing to initiatives such as solar or wind farms is a concrete way of supporting the energy transition while diversifying your portfolio.

• Invest online: Online investment platforms offer simplified access to a multitude of opportunities. These tools make it easy to diversify your portfolio, often at reduced cost, while benefiting from optimised management thanks to technology.

It is important to note that these investments carry risks, including partial or total loss of capital. It is therefore essential to understand the risks associated with each option and to adapt your choices to your financial objectives.

Despite its many advantages, responsible investment also presents risks that investors need to consider.

Risks associated with assessing ESG criteria

Not all products presented as responsible necessarily meet rigorous ESG criteria. It is essential to carefully check the disclosure documents provided by asset managers to ensure compliance with sustainability objectives.

Variable performance

As with any type of investment, past performance is no guarantee of future results. It is important to define realistic objectives and to remain vigilant in the face of changes in the financial markets and ESG criteria.

Liquidity risks

Some responsible investments, such as private equity funds or green bonds, may be less liquid than traditional investments. Investors must be prepared to maintain their investments over the long term and accept that the rapid resale of certain assets may be difficult, particularly during periods of market volatility.

Evolving regulations

ESG standards and regulations are constantly evolving, which can affect investment strategy. Investors need to keep a close eye on new regulations and adjust their approaches to comply with legal requirements and market expectations.

Responsible investment is an approach that incorporates environmental, social and governance (ESG) criteria into the choice of investments. It involves supporting companies that adopt sustainable practices that respect society and the environment, while benefiting from attractive financial opportunities. As well as responding to societal concerns, responsible investment offers a long-term competitive advantage, with better controlled risk management. It is therefore a relevant solution for those who want to reconcile financial performance and positive impact, and represents a winning choice for the future.

This article was produced by Eurazeo Global Investor and is for information purposes only. It should not be construed as a solicitation or offer of any financial products or as legal, tax, financial or other advice. Readers are invited to contact their own advisors for any analysis relating to the content of this article. The information presented does not claim to be exhaustive. Accordingly, this document alone should not be relied upon in making an investment decision. Please refer to the legal documentation of the funds mentioned before making any final investment decision.

Past performance is not necessarily indicative, nor a guarantee of future results. Information on past investments is provided solely to illustrate the nature of these investments and the related investment strategy and process. There can be no guarantee that the investments made by the funds will produce comparable results, or that the targeted returns will be achieved. Investing in private equity/private debt funds involves a risk of capital loss and illiquidity.