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​Thought Exercise #1:
Sustainable Development Goals

Do these look familiar?

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The 17 Goals (United Nations Department of Global Communications, 2020)

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Which of these goals resonate with you? For more information about each goal, take a look at the UN’s website and click through the goals that resonate with you. Each goal has its own page with an overview, targets, and progress (United Nations Department of Economic and Social Affairs, 2021).

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Ask Yourself

What does achieving these goals look like to you?

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If a government or company were to achieve these, what would they do?

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Keeping in mind your financial goals and budget, what kind of impact do you want to have with your investment?

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If your answers are short, don’t worry. Your criteria may change as you reach different stages of life or receive new information. Any answer can be used as a starting point.

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Thought Exercise #2: Sustainable Investment

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Sustainable Investment: A Definition

The Global Sustainable Investment Alliance (GSIA), “an international collaboration of membership-based sustainable investment organizations,” proposes the following definition of sustainable investment:

 

“Sustainable investing is an investment approach that considers environmental, social and governance (ESG) factors in portfolio selection and management… [that] have emerged as a global standard of classification” (Global Sustainable Investment Alliance, 2018).

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ESG Factors

The UN Principles for Responsible Investing (UNPRI) initiative gives examples of ESG Factors. 

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The UNPRI’s introduction to responsible investing summarizes responsible investing, its history, and global driving forces (PRI Association, 2021). 

There are seven further “definitions” or approaches that can be used (Global Sustainable Investment Alliance, 2018).

ESG Strategies Chart (Eurosif, 2021)

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1. Impact/Community Investing:

These can be further defined as "targeted investments aimed at solving social or environmental problems, and including community investing, where capital is specifically directed to traditionally underserved individuals or communities, as well as financing that is provided to businesses with a clear social or environmental purpose;” (Global Sustainable Investment Alliance, 2018)

Which products support the community, and how?

Exercise Questions

2. Corporate Engagement and Shareholder Action:

Also defined as "the use of shareholder power to influence corporate behavior, including through direct corporate engagement (i.e., communicating with senior management and/or boards of companies), filing or co-filing shareholder proposals, and proxy voting that is guided by comprehensive ESG guidelines” (Global Sustainable Investment Alliance, 2018).

Your interpretation of this definition may vary depending on the financial product you’re considering. For stocks, do executive management communicate transparently, regularly, and honestly? What do you hear about them on public news channels?

3. Sustainability Themed Investing: Are there any products which are known for being sustainable? In your opinion, what makes them sustainable? (for example, investments in sustainable agriculture)

4. Best In-Class: Are there any products you’d like to support because they align with your values? (ie. clean energy indices). Reading market news and company reports (for individual stocks) can assist an investor assess a product's ESG performance.

5. ESG Integration: During financial analysis, investors will systematically include the ESG factors below (Global Sustainable Investment Alliance, 2018) . Are any potential financial products taking action towards the ESG areas? 

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ESG Areas (PRI Association, 2021)

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6. Exclusions: Are there any financial products you would avoid, because you feel they don’t support your values?

7. Norm-based Screening: This can include "screening of investments against minimum standards of business practice based on international norms, such as those issued by the OECD, ILO, UN and UNICEF;”

(Global Sustainable Investment Alliance, 2018) International norms can be found online – for example, the OECD lists international and sector-specific (ie. garment, agriculture) norms, such as avoiding child labour (OECD, 2018). 

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Thought Exercise #3: Sample Portfolios

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If everyone chooses their own investment portfolio according to their individual tastes and risk tolerance levels, everyone will have a very different portfolio.

Through this green finance guide, we can show you where to find green financial products, and point you to Hong Kong and global leaders in sustainable investment, but you know what you want out of your portfolio.

To illustrate how a portfolio could be divided among multiple sustainable investments, we have included a link to the Sustainable Economist’s model portfolios website below, where you can view sample portfolios which have incorporated responsible investing principles.

The Sustainable Economist is operated by Tim Nash, an investment coach, founder of Good Investing, and a member of the Responsible Investment Association in Canada (Nash, 2021, RIA Canada, 2021). We are not affiliated with Mr. Nash nor are we deriving any income from this project.

Continue to the next section on Green and Sustainable Financial Products.

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References

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