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What is sustainable investment and what does ESG mean?

Sustainable investment is intended for investors who seek not only a return on their money but also aim to have an influence on creating a better tomorrow. An increasing number of fund customers choose sustainable investments. This is easy to do through Nordea funds, which include a wide range of funds with a sustainability focus. They invest in instruments where one or more of the following criteria are considered:

  • Environmental, which includes mitigating climate change, promoting biodiversity and increasing energy efficiency. 
  • Social, which includes promoting human rights, equality and labour rights. 
  • Governance, which includes combatting corruption and bribery and a focus on corporate remuneration systems. 

ESG refers to the consideration of environmental, social and governance factors alongside financial factors in a responsible investment process. This process is also referred to as sustainable investing, a term that gained widespread use when the EU Sustainable Finance Disclosure Regulation entered into force in March 2021.

Why should I invest sustainably?

By investing sustainably, you could contribute to building a more sustainable world. The more people choose investments that promote sustainability, the more of a driving force for sustainability we can be. 

  • And you don’t need to compromise on the return on investment because the expected return and costs of our sustainable funds are similar to those of ordinary ones. Read more about the topic in our article titled “Does sustainable investment pay off?” (available in Finnish)
  • You will avoid investing in companies that violate international human rights, labour rights and environmental regulations. 
  • You can contribute to promoting sustainable development, which may improve risk management and the long-term return on investment. 

How can I invest sustainably?

Most Finns who have made sustainable investments have done so through funds focusing on sustainability. In many ways, funds are a smart choice for investors with a sustainability focus. Large fund managers that maintain the funds have ample resources to assess their investments, including from an ESG perspective. Nordea, for example, has a dedicated sustainable investment team whose analysts participate closely in the investment processes of many funds. 

EU regulation classifies funds into three different categories based on how sustainable they are: 

  • Funds that have sustainable investment as its objective. In EU regulation, these are called dark green funds, or Article 9 Funds. 
  • Funds that promote environmental or social characteristics, provided that the companies in which the investments are made follow good governance practices. In EU regulation, these are called light green funds, or Article 8 Funds.  
  • Funds that don’t fulfil the aforementioned criteria but fulfil basic-level ESG requirements.  

It’s good to remember that there is no single correct way to invest sustainably. There are lots of different sustainable funds and other investment products, and their focus can vary, depending on their investment philosophy. Your way of investing is determined by what you value and consider important.

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If you’d like to talk with our advisers, you can book and appointment for a free-of-charge meeting where we can create a sustainable investing plan for you.

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Nordea as a sustainable investor

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Now you know more about how your preferences for sustainability can influence your choice of investments . We are happy to help you get started.

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Important information about investing

The information provided on this website is intended for general product information only and does not constitute investment advice or recommendations. When it comes to funds or equities, past performance is not a guarantee of future results. The value of fund units or equities may increase or decrease due to market movements, and it is not certain that you will get back the entire amount you invested.

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