Ethical Investments: What They Are, Funds and Returns

In the past, attention to ethical investments was not as pronounced as it has become in the last twenty years. Just think of the many investments that were often made in fields such as arms, nuclear, tobacco or gambling. Over the years, however, interest in ethical issues has grown exponentially and, at the same time, investments in sectors of this type have also increased. It cannot be excluded that once the pandemic has passed, this trend may become even more consolidated.

What are Ethical Investments

Ethical investment refers to a type of financial investment that aims to create and maintain human well-being and bring value to the entire community. Therefore, in the case of ethical investments, the investor uses his resources for solidarity, environmental and socially useful purposes.

Main Sectors

Ethical investments can embrace numerous sectors. In particular, the most popular are those that aim to safeguard the ecosystem and the environment, or those that focus on the green economy. They range, in fact, from the construction of low-impact solar panels, to the development of hydrogen, to the installation of photovoltaic solutions for private individuals up to the now already popular electric cars. The alternatives are not lacking, also because there are more and more incentives that governments allocate to projects that base their focus on sustainability.

The Best Green Stocks to Invest in Today in Italy

Italy, as far as the green economy is concerned, holds an important position. In fact, it is one of the countries with the lowest levels of polluting waste emissions during the production of goods and services. We now analyze what are considered the best Italian green stocks

A2A Stocks

A2A is an Italian multi-utility company that operates in many sectors, which can be grouped into three macro categories: energy, networks and environment. It therefore ranges from: electricity, electric mobility, energy efficiency, public lighting, development of smart applications and services to transform cities and services, waste collection, urban hygiene and recovery of matter and energy.

A2A has also developed a strategic plan in which it has invested more than 16 billion euros to start the energy transition. The value of A2A shares has been around €1.5 for the past five years.

The best ETFs to invest in

An alternative to the purchase of securities and shares of specific companies committed, also, to ethical purposes is the investment in index funds, or ETFs. Below are some of the best ones in which it could be advantageous to invest.

Lyxor New Energy UCITS ETF

This is an ETF that replicates the benchmark World Alternative Energy Total Return Index, which is the index that reflects the top twenty companies operating in the renewable energy sector in the fields of solar, wind and biomass energy. This fund is 100% stocks and the top five stocks are from the likes of: Albemarle Corp ,Enphase Energy Inc, Edison International, Schneider Electric SE and SolarEdge Technologies Inc.

iShares S&P Global Clean Energy

This ETF aims to replicate the returns of the S&P Global Clean Energy Index, an index that groups the top thirty stocks of companies engaged in the renewable energy sector. The fund is physically based in Ireland and has been active for more than five years. 

L&G Clean Energy UCITS ETF

The objective of this fund is also to provide exposure to the global clean energy sector. The ETF will seek to replicate the performance of the Solactive Clean Energy Index. Among the top five stocks that this fund invests in is the world’s most famous full electric car company, namely Tesla. The special feature of this fund is that the dividends are invested back into the fund. 

Yield: Is it worth making ethical investments? 

Ethical investments are still, in part, viewed with skepticism by those who think that the gains are not congruous, when compared to traditional investments. However, suffice it to say that these sectors are often financed by government agencies and that all the latest administrative decisions are moving in the direction of creating a more eco-friendly world. 

One of the most important administrative moves, is certainly the Green Deal, the so-called transversal pact that aims to transform the European Union into an ecological, sustainable and efficient economy. The Green Deal has as its objectives: the reduction of gas emissions by 2030 by at least 55% compared to 1990 levels, the creation of a new economic model in which growth is not linked to the exploitation of planetary resources and finally the taking care of every person and place.

Therefore, it can be seen that the ethical sector is extremely incentivized and this leads to interesting growth rates also from a financial point of view.

Final Considerations

Investments for ethical purposes have become very topical, just think that many companies are adding to the traditional balance sheet, the so-called sustainability report, which is a document aimed at communicating to all stakeholders, what have been the results in terms of social responsibility. Companies are supported by governmental bodies, through incentives and funds, and the subject is continuously discussed by public opinion.

In addition, recent surveys have shown that 84% of young people in the 20-30 age group are increasingly interested in ethical finance. All this attention has, and will increasingly have, a future impact also on financial movements which often, as we know, follow trends. Finally, it is worth remembering that making ethical investments is, first and foremost, an act of responsibility. 

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