How does sustainability affect our investments?

Increasingly, companies and society are becoming aware of the need to implement sustainable actions in their daily lives. Fifty years ago, sustainability was seen as merely a cost for businesses; now, it's a necessity. As investors, we can also pivot our investments to more sustainable companies. However, we are not guaranteed higher returns or lower risks.

Ten years ago, there were leading companies that applied sustainability or ESG (environmental, social, and governance) criteria to their strategies, and it was even said that they were more stable in situations of market volatility. Today, this differentiation has been lost, as all companies, either voluntarily or forced through legislation, apply similar policies.

If we want to invest in ESG criteria, we can do so through sustainability indices. Specialized investment funds make the selection for us. Or we can go to the source of the information and choose the portfolio ourselves. There are nearly 600 different companies on the market that assess, using their own criteria, whether listed companies are sustainable or not. You can imagine that there will be as many results and rankings as there are companies responsible for the analysis (the reliability isn't the best). And we won't always agree. To give you an example: Tesla isn't considered a sustainable company, not because of the extraction of its raw materials or the wear and tear on its car batteries, but because of the management carried out by the board of directors.

There's just one problem. All companies are now sustainable, but which ones really are? Precisely for this reason, in some parts of the world, like the US, the use of ESG in investments has begun to be banned.