In recent years, sustainable investing has moved from a niche area to a mainstream consideration. The EU in particular has been at the forefront of efforts to develop the market for sustainable investment and build a resilient financial system that supports sustainable growth.

What Do We Mean by Sustainable Investing

Sustainable investing involves allocating capital with environmental, social and governance (ESG) factors in mind. ESG stands for:

• Environmental: how a company manages its impact on natural resources and climate change.
• Social: how it treats employees, customers and communities.
• Governance: how it is managed and whether it follows transparent and accountable practices.

These considerations sit alongside traditional measures such as profit, cash flow and growth potential. ESG analysis can help identify long-term risks and opportunities.

Why Sustainability Matters Now

Several factors make sustainable investing more relevant than ever:

1. Climate risks are accelerating
   Extreme weather events, increasing energy demand and shifting regulation all demonstrate that climate change has direct financial consequences. This can be clearly seen in the insurance industry, with record-breaking claims and resulting higher premiums making an increasing number of areas uninsurable. Companies that fail to adapt to climate change may face higher costs, competitiveness issues, reputational damage or even legal challenges.
2. Policy direction is still clear
   Although some governments have slowed or adjusted their climate policies, the broader trend toward decarbonisation remains in place. The European Union’s Green Deal, carbon reduction targets and renewable energy commitments are reshaping industries from transport to energy. European regulators have also taken steps to improve the market for ESG products by creating rules that improve transparency and investor protection while channelling private investment into sustainable initiatives.
3. Resilience through governance
   Companies with stronger governance and risk management have historically been better placed to navigate economic shocks. ESG considerations often overlap with qualities such as balance sheet strength, transparency and accountability, which are central to long-term investing.

How to Approach Sustainable Investing

Investors can consider several routes into sustainable investment:

• ESG funds that select companies meeting defined standards/pre-defined sustainability objectives.
• Green bonds that raise capital for environmentally beneficial projects.
• Thematic funds that target areas such as renewable energy, clean water or social housing.
• Broadly diversified portfolios where sustainability sits alongside traditional asset classes such as equities, bonds and alternatives.

The right balance will depend on individual objectives, time horizon and risk tolerance. This forms part of our suitability process where we consider your individual circumstances alongside your sustainability preferences and recommend a product that meet your requirements. Please see our FAQ for details on how sustainability preferences fit into our overall suitability process.

Final Thoughts

Sustainability may not dominate every political headline today, but the forces shaping our future economy remain unchanged. Climate risk, regulatory direction and investor demand all point toward the growing importance of sustainable strategies.

Seeking advice when investing is essential. A diversified approach is the best way to balance opportunity with risk. At Cantor Fitzgerald Ireland, we offer a number of sustainability-focused offerings and we encourage investors to contact us to explore how sustainable investing can form part of a long-term strategy.

Written by: Carolina Angarita-Cala, Head of Sustainability, Cantor Fitzgerald Ireland