Sustainable Investment

Wealth is one of everyone's desires. However, no one wants superficial wealth. Everyone wants wealth that is stable. Therefore, sustainable investing is a strategy and investment approach in the modern world accepted by professional investors and people around the world today. This sustainable investment strategy is not only about investing in companies with good fundamentals that are likely to grow. The company's ESG performance must also be comprehensively considered. This ensures that investors can be confident their investments will grow sustainably in the long term.

What is sustainable investing?

Sustainable investment is an investment concept that considers operations, opportunities, and environmental, social, and governance risks (Environmental, Social, and Governance: ESG) throughout the business's value chain that might affect business operations and all stakeholders. Together with analyzing company’s financial data because today's business operations are often influenced by social and environmental issues and factors. Investments should, therefore, consider risk management and opportunities in these areas. Which affects competitiveness, operating results, innovation capability growth, transparency, and efficiency in corporate governance and is directly recognized by various stakeholders. Sustainable investment is thus viewed as investing with a comprehensive perspective and is becoming increasingly popular.

Sustainable investment strategy

Sustainable investing has developed various forms and strategies, much like investing in other concepts. Examples include portfolio risk management by screening for negative factors (Negative Screening), such as avoiding investments in businesses that might contradict societal morals and ethics, or portfolio risk management by screening for positive factors (Positive Screening), like choosing to invest in socially responsible businesses that promote ethical principles or excel in ESG operations.

Therefore, sustainable investment strategies don't have fixed rules. It's about choosing to invest in a business that excels in sustainability, has a strategy, a business model, and standardized risk management processes. These processes consider both qualitative aspects, like environmental, social, and corporate governance dimensions, and quantitative aspects, as reflected in sustainably growing operating results, making them worthy of being a Sustainable Investment.

Why is sustainable investing important?

Choosing sustainable investment, in addition to reducing investor risk and increasing the likelihood of good returns, also encourages and supports companies and organizations to establish standards for more sustainable and equitable business operations. ESG is another indicator of a business's stability and sustainability. Moreover, investing in projects with sustainable business practices tends to yield higher returns because key project risks are managed. It can also help reduce the volatility of an investment portfolio, leading to more consistent returns.

Examples of ESG criteria that investors should consider

ESG factors are crucial for investors to consider when evaluating the sustainability and ethical implications of an investment in a business or company. This is because it indicates that the company operates with profit growth in mind, alongside societal, environmental, and governance development.

These include:

  • Environment (environmental management): Efficient use of resources and preservation of the natural environment affected by the company's operations.
  • Social (social management): Fair and equal human resource management, employee safety, and maintaining good relationships with surrounding communities.
  • Governance (Good governance management): Having a robust corporate governance policy, anti-corruption measures, transparent operations, and taking care of stakeholder interests fairly.

For whom is Sustainable Investment suitable?

Sustainable Investment is not only for new generation investors or Millennials. It's also for general investors who wish to manage portfolio risks by screening factors and impacts in various aspects with the goal of generating long-term sustainable returns and minimizing negative societal and environmental impacts.

What are sustainable stocks?

Sustainable Stocks, or Thailand Sustainability Investment (THSI), is a list of publicly traded companies that operate sustainably concerning the environment, society, and good governance. This list offers another option for investors interested in sustainable investment concepts. It encourages considering ESG factors when making investment decisions and analyzing the company's financial data to achieve consistent long-term returns. Sustainable stocks in THSI are chosen from companies that voluntarily participate in the sustainability assessment questionnaire, prepared by the Stock Exchange of Thailand. The assessment includes questions in the ESG dimension. The Sustainability Assessment form is reviewed annually to align with both international and national sustainability trends (Sustainability Trends).

Stock Sustainability Assessment

Companies listed as sustainable stocks in THSI must achieve a score of at least 50% from the sustainability assessment in each area or be a listed company that has been selected as a member of the Dow Jones Sustainability Indices (DJSI). Additionally, they must meet specific criteria, such as the results from evaluating the quality of corporate governance reports (Corporate Governance Reporting: CGR), net profit, and shareholder equity outcomes. They should also have satisfactory oversight on issues related to the qualifications of listed companies without causing ESG impacts and must not be securities marked with a "C" sign. The sustainable investment working group, comprising experts in corporate governance and sustainable development along with agencies in the capital market, ensures transparent screening and selection.

Why should you invest in sustainable stocks?

Environmental issues and inequalities stemming from unsustainable business practices can lead to long-term challenges and adverse impacts on society. However, integrating ESG factors, both directly and indirectly, into operational processes can pave the way for genuine business sustainability. This approach not only mitigates business risks but also enhances the potential for generating sustainable long-term profits.