Know about green bonds and reason of market expanding | Motilal Oswal

What are green bonds

Of late, an increasing number of stock market investors are slowly starting to realise the consequences of negative environmental impact of companies and their business models. That said, they’ve also begun to come to the realisation that funding companies that leave a negative impact on the environment is only accelerating the degradation even further.

But then, what if you could improve the sustainability of the environment by investing responsibly? Would you opt to do so? If the answer to that question is a yes, then this article is for you. Let’s take a look at how you can use investing as a method to improve the environment’s sustainability. 

How can you bat for sustainability of the environment by investing? 

In the 1970s and 80s, investors who became disenchanted with investing in companies that accelerate the degradation of the environment came up with a revolutionary concept which is now known as ESG investing. ESG is an acronym that stands for Environment, Social, and Governance. 

ESG investing basically deals with investing in companies that are environmentally cautious, non-polluting, and take an active interest in making the world a better place. It is also known as green investing or green technology investing. 

Now that you’re aware of ESG investing, how can you bat for sustainability of the environment through investing? 

Firstly, you can start by investing in stocks of companies with environmentally friendly business practices. Alternatively, you can also choose to invest in mutual funds online that invest in green technology companies and renewable energy companies. 

And finally, you can also invest in green bonds. Green bonds are financial instruments that provide fixed income to the investor. The money raised through green bonds are used to fund projects that seek to create a positive impact on the environment. 

By investing in such environmentally ethical companies, you get to play a small part in helping the planet recover and become more sustainable.  

What are some of the key things to keep in mind when investing for sustainability of the environment? 

Okay so, now that you know what green investing is all about, it is time that we take a look at a couple of key things that you would have to keep in mind. 

1. Determine the kind of impact that you wish to make

Firstly, before you go ahead with green investing, it is important to get to know the kind of positive impact that you wish to leave. For instance, you might want to contribute to cleaner means of energy production or maybe contribute towards providing access to clean water or even recycling of waste.  

2. Identify the right companies, funds, or bonds 

Once you’ve found out the kind of impact that you wish to make, the next step is to identify the right stock, fund, or bond to invest in. So, for instance, let’s say that you wish to contribute towards making energy production cleaner. In that case, investing in renewable energy companies or mutual funds that invest in renewable energy companies may be the way to go. 

Conclusion

When identifying the right assets to invest in, make sure to conduct thorough research and analysis on your own. It is advisable to not rely on third-party assessments since they may not be objective. 

That said, if you’re someone who lacks the funds necessary to make lump sum investments in green technology companies, you can always look to start an SIP online. An SIP doesn’t require you to make large investments and it will allow you to start off slow.

However, remember to first open a demat account before proceeding with your investment journey. If you don’t have one already, simply visit Motilal Oswal right away to open one for free. 

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