Sustainability is a hot-button issue across the globe, especially in finance. Once dismissed as a buzzword, sustainability is making a tangible impact, one business at a time. It’s something experienced investors like Alessandro Lardi, a founding partner of Swisspath, know firsthand.
With decades of experience investing in cutting-edge, eco-friendly businesses, Lardi is acquainted with how effective the environmental, social, and governmental space can be from a financial perspective. “In my experience, sustainability is the right thing to do, but it also often leads to tremendous returns on investment. It’s a true win-win for investors, the environment, and future generations,” he said.
The Harvard Business Review states, “It should also be clear that there’s also a big upside waiting for those who embrace the world’s shift to ESG: multitrillion-dollar markets in clean energy, electric and autonomous vehicles, plant-based proteins, precision agriculture, [artificial intelligence]-driven efficiency technologies, and much more.”
Investors are increasingly recognizing the importance of aligning their portfolios with ethical and environmental principles to fight against climate change, social inequality, and corporate governance issues. Sustainable investing, also called socially responsible investing or environmental, social, and governance investing, is a strategy that balances financial returns with social good and positive environmental impact. Sustainable investments are different from traditional investments because they consider ESG criteria. Environmental factors assess a company’s impact on nature, social factors evaluate its relationships with stakeholders, and governance considers its management practices.
It might sound like a passing fad, but sustainability is increasingly on investors’ minds. In fact, a recent report found that 89% of investors consider ESG issues in their investment decisions. Considering the benefits of sustainable investments, it’s no surprise that more investors want to balance their portfolios with sustainable businesses.
Sustainable business models take a long-term view focused on future viability, making it much likelier for an investment to generate predictable returns in an unpredictable world. “Sustainability is synonymous with longevity. Businesses focused on sustainability are designed to endure and adapt, making them more resilient to market fluctuations,” Lardi said. Several reports found that sustainable businesses have nearly four times greater operating margins than non-ESG businesses, leading to long-term value.
According to Alessandro Lardi, sustainable companies also have greater brand strength and customer loyalty. “Consumers are increasingly aligning their values with their wallets,” he said. “Investors need to spot which causes consumers care about the most. This forward-thinking approach supports long-term loyalty and trust, which are essential for growth.”
Sustainable investments are rising in popularity, but it’s still essential for investors to choose their opportunities wisely. Investors like Alessandro Lardi use positive screening to actively seek out companies that make a positive impact on society. For Lardi, working with brands like Happy Culture Kombucha is personally fulfilling and financially rewarding.
Based in South Africa, Happy Culture Kombucha supports sustainability by contributing to better health and well-being. Happy Culture’s kombucha is a probiotic drink meant to replace sugary drinks and sodas, improving digestive health while reducing sugar consumption and its associated diseases.
But Happy Culture’s sustainable product is just the beginning. The company’s alignment with several U.N. Sustainable Development Goals, including gender equality, affordable and clean energy, and responsible consumption, underscores its commitment to sustainability.
Happy Culture is working hard to reduce carbon emissions. The brand currently runs on 20% solar power but plans to reduce its emissions even more by installing solar panels and switching to electric vehicles. Happy Culture Kombucha also minimizes waste during production and uses aluminum or PET plastic bottles, both of which are lightweight and completely recyclable. “Happy Culture’s product supports community health. Its overall business model also supports sustainability in the long term. The founders’ vision aligns perfectly with my investment philosophy,” Alessandro Lardi said.
Sustainable investments balance the needs of a changing world with financial returns. According to investors like Alessandro Lardi, a sustainable approach to investing might be just what the world needs to combat climate change and systemic inequities — all while generating impressive returns. Credit Suisse reports that 68% of ESG funds outperformed the MSCI All Country World Index in February 2021. Experts expect ESG-optimized investments will continue to exceed traditional investments, so it’s just a matter of time before ESG becomes the gold standard.
As profitable as sustainable investing can be, Alessandro Lardi’s approach to investing goes beyond financial gains. “Every investment in sustainability is a seed planted for a greener, more equitable future,” Lardi said. “Investing in companies like these isn’t just a business decision; it’s a statement about the kind of future we want to create.”