Businesses driving the sustainable transition operate on the right side of social and environmental change and are usually built on strong foundations. They are purposeful, resilient, innovative companies in control of their own destinies – consistently generating cash flow and profits through products, services and activities that help create a better world.
Sustainable investing seeks long-term financial outperformance and social and environment change benefiting current and future generations. By focusing on companies whose activities are aligned with clear themes – including health and wellbeing, inclusivity, efficient and circular production and a thriving natural environment – investors can make a real difference.
Markets can be relatively efficient over the short term, but they struggle to discount positive change over the medium and long term. This means quality businesses helping to improve society and the environment often have better long-term performance prospects than many of the largest stocks in the index today.