easy and green investment trends e-⁠residents can follow now

Grünfin now onboards Estonian business clients, a great solution for e-⁠residents looking to grow their money & not compromise their values.

This guest post about sustainable investing was written by Grünfin, an Estonian-founded investment platform bringing easy and impactful investing to European private and business investors.

The Grünfin values-based investing platform can now onboard Estonian business clients. This is great news for e-⁠residents with an OÜ who are looking to grow their money and not compromise their values. Clients can aim for market-based returns, even if they are not so interested or engaged in picking stocks, day trading, or analyzing assets.  Currently, a business client's ultimate beneficial owner must reside in the EU.

This article considers sustainable investing, including what it is, why it is becoming popular, and how e-⁠residents can try it through the Grünfin platform.

What does sustainable investing mean? 

Regulation defines sustainable investing as investments in economic activities that contribute to environmental or social objectives, provided they do not significantly harm other objectives and investee companies follow good governance practices.

This definition is very broad and ambiguous. What constitutes harm for example? And whose objectives might need to be considered? Different people might have different ideas, values or cultural points of view about these concepts, meaning the definition is quite subjective and open to interpretation. 

At Grünfin, we take a science-based rather than opinion-based definition when talking about sustainable investing. 

We break sustainability into 3 themes and define them as follows:

1. Climate: Companies aligned to the Paris Agreement. This is a historic treaty ratified by nearly 200 countries covering 98% of global greenhouse gas emissions. The goal is to reduce these emissions to net zero by the middle of this century, thereby limiting global warming and saving our planet.
2. Gender Equality: Companies ranking highly on equal treatment of women and men. 
3. Healthcare: Companies innovating and pushing the boundaries in medical treatments and technology. 

Debunking myths: Green investments are only about solar panels and electric vehicles.

It's pretty undeniable that “sustainability” has become a highly overused buzzword. But it doesn’t take away from the fact that companies have a responsibility to contribute to a greener future. Sustainability applies to all industries, not just solar energy, electric cars, or anything that has a physically “green” label on it.

But sometimes things aren’t as sustainable as they seem or advertise.

Take solar panels for example. A solar panel is a device that converts sunlight into electricity by using photovoltaic cells. They produce a renewable and clean source of energy, reduce greenhouse gas emissions, and can even lower electricity bills. Great! But, it’s not so black or white.

80% of the world’s solar panels are produced in China. Many of these Chinese factories use coal, the worst emitting source of energy, for their electricity. Added to this, there have been allegations of forced labour and substandard labour conditions at some of these factories.

Not so sustainable, huh? 

And let's face it, in the future we do need energy to be greener but we'll still need all the same industries as today. We'll still need food producers, technology companies, banks, pharmaceuticals, luxury goods, etc. But they have to all be more sustainable. 

The biggest companies in these sectors aren't disappearing any time soon, and their impact on the planet and its people is enormous. Think of the positive impact a global company with billions of consumers could make if it reduces its emissions by a few % a year.

When large corporations head down a sustainable path, we feel the impact. Nobody is 100% emission-free today. Becoming fully sustainable is a journey and we must get there by 2050.

Why is there a movement towards sustainable investing?

The world needs companies to be more caring and sustainable, and one way to push for this is through sustainable investing. 

Shocking fact: 70% of the EU's energy still comes from dirty sources like oil, gas and coal. And Europe is actually doing better than the rest of the world.

The good news is that investments in green sources are growing strongly and 200 nations have agreed to the Paris Agreement - the most ambitious, global and impactful climate treaty, which aims to lower greenhouse gas emissions to net zero by 2050.

And it’s not only nations. The investment community has also taken action by growing sustainable investments 5x in the past 5 years. Consumers too wish for healthier and more sustainable solutions. Regulators are pushing for more sustainability requirements. Sustainability and sustainable investing is a movement since it is vital for a healthy planet. 

Is sustainable investing also profitable? 

There is a myth that sustainable investing is more like a charity. Trends, however, show the contrary. More sustainable stocks are performing better than less sustainable peers. 

An index of stocks aligned to the Paris Agreement goal of net zero emissions has performed better than the overall stock market since 2016, when the Agreement went into force. This was measured using the 300 most climate sustainable stocks from those that make up the S&P500 index. 

How to easily start making your investments sustainable

Due to all the complexity around sustainability rules and also a lack of data available, it is not easy for private individuals to do research. For example, it might be difficult or time-consuming for individuals to answer the following questions:

• Are solar panel companies sustainable if they use electricity from coal in their production processes and have a history of using forced labour? 
• Are banks that finance green energy projects as well as oil and gas projects sustainable?
• What about energy companies that were historically large oil producers but are now transitioning towards green energy? 

This is why Grünfin exists. We're here to do the research for you, and so make sustainable investing with market-based returns easy and accessible for everyone. 

Applying as a business client

E-residents who run an OÜ in Estonia and reside in the EU are eligible to apply for a business account with Grünfin. If you're interested in learning more about the Estonian investment environment, read this blog post.

To apply as a business client of Grünfin, it takes just 10-15 minutes and only a few steps:

1. Go to grunfin.com and prepare your ID card and your OÜ's LEI code; 
2. Answer a few simple questions about the sustainability categories you care about and the risk level you prefer;
3. Fill in your personal information, enter your company name and verify the details;
4. Decide the sums to start with. You can also set recurring payments if you wish;
5. Congratulations! You can continue with your day job or enjoy life; while we take care of your investments.

As a community, we can create and accelerate the much-needed change! 

Just tell us about your values, lay back, and let Grünfin invest for you. You do not need any previous experience to become an investor! 

The investment service provider is Grünfin AS. Learn the terms of service and risks at https://www.grunfin.com and if needed, consult an expert before making investment decisions.