 Building a Sustainable PortfolioDiane-Charlotte Simon Chapter 9 in Sustainability:Business and Investment Implications, 2023, pp 241-264 from World Scientific Publishing Co. Pte. Ltd. Abstract: This chapter complements the previous chapter on sustainable finance and investing, by looking in more detail at a range of implementation strategies across the main financial instruments. The chapter begins with an introduction to the main asset classes present in the financial market (bonds, loans, equity, mutual funds, and exchange-traded-funds (ETFs)). The chapter distinguishes between debt and equity instruments. Since their creation in 2007, more than $4 trillion of sustainable debt instruments have been issued. This estimate does not capture several sustainability-related areas that are not specifically classified as sustainable such as renewable energy financing, project finance, capital markets for infrastructure, etc. The chapter highlights the fact that it is now possible to employ investing strategies considering sustainability across nearly all financial products, which in turn makes it possible to build a sustainable portfolio. The chapter also introduces the popular Green, Social, and Sustainable bonds, and loans (sustainable debt with the Use-of-Proceeds approach) as well as the Sustainability-linked debt instruments (sustainable debt with the Objectives approach). Portfolios can be built either by investors themselves, or with the support of financial advisors. Investors can also purchase diversified pre-built portfolios like ETFs or mutual funds following sustainable investment strategies. However, while the proportion of sustainable products has dramatically increased, it still does not represent most financial assets. Strikingly, in certain regions such as Europe, considering sustainability risks is now mandatory for all financial products. The chapter concludes with an example of a climate change portfolio. Keywords: Sustainability; Sustainability Risks and Opportunities; Sustainability: Business and Investment Implications; Sustainable Finance; Sustainable Investing; Impact Investing; Sustainable Entrepreneurship; ESG; Business Case for Sustainability; Investment Case for Sustainability; Introduction to Sustainability; Introduction Sustainable Finance; Introduction to Sustainable Investing; Introduction to ESG; Introduction to Impact Investing; Sustainability Handbook; Sustainability Textbook; Sustainable Business Textbook; Sustainable Business Handbook; Sustainable Finance Textbook; Sustainable Finance Handbook; Impact Investing Textbook; Risk Management & Sustainability; The Corporate Sustainability Spectrum; Business and Financial Implications of Climate Change; The Financial Case for Embedding Sustainability Core to Business Strategy; Corporate Sustainability & Financial Performance; Shareholder Engagement; The Pressing Needs For A Sustainable World; Scale-up; Impact Entrepreneur; Impact Entrepreneurship; Sustainability Science and Challenges; Internalizing the Externalities; The Role of Government; Fiscal Impact; Macro-economic Performance; Realism; Mission Creep; Single Issue Capture; GreenWashing; Whitewashing; Hidden Agendas; Transparency; and Competitiveness (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789811240928_0009 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd. |
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