Who decides what is sustainable?

Who decides what is sustainable?
Who decides what is sustainable?

The dilemmas of sustainable investing reveal that the challenges go far beyond the simple pursuit of financial performance.

As investors focus on the end of the year, many are taking the time to re-evaluate their investment choices and how they want to grow their savings. In countries like Switzerland, where contributions to personal pension plans are tax-efficient, the long-term perspective is often at the heart of financial decisions. However, the idea of ​​“voting for sustainable investing” at every opportunity is far from simple for everyone.

Varied investment objectives

Sustainable and financial investment goals are not uniform from one individual to another. Each investor can have a personal vision of what they consider sustainable, based on their values ​​and priorities. While some take a strict approach and choose funds exclusively labeled as sustainable, others favor more traditional options that they believe better fit their financial needs, while integrating ethical principles into other aspects of their lives. This mixed approach sometimes includes philanthropic contributions or donations aimed at offsetting the potential impact of their unsustainable investments.

The Dilemma of Choices

For asset owners, the dilemma becomes more complex as regulators tighten definitions and requirements related to sustainable investing. If, on the one hand, some investors seek to align their investments with their moral values, they do not forget the importance of financial performance. This dual objective creates tensions, especially when sustainability choices risk hindering financial returns.

More and more investors are becoming interested in strategies that are not necessarily labeled as sustainable by regulators.

Several difficult questions therefore arise: should natural gas be considered a sustainable activity or a transitional solution? Is nuclear energy a sustainable solution? Can weapons used to strengthen public security be considered compatible with ESG (Environmental, Social and Governance) criteria? These debates reflect the fact that both investors and regulators have different views on what actually constitutes sustainable investing.

Transition-focused approaches

More and more investors are interested in strategies which are not necessarily labeled as sustainable by regulators, but which meet their own criteria of respect for the environment and society. For example, approaches focused on the transition to a greener economy or active engagement with businesses are increasingly popular strategies. These methods aim to support change within businesses and industries, but they are not always recognized by traditional sustainable investing labels and taxonomies.

Regulators play a key role

So who decides what is sustainable? Regulators play a key role in setting minimum standards for the marketing of sustainable investment products and ensuring transparency. The regulatory framework is essential to protect investors and ensure informed decision-making. However, asset holders, for their part, exercise their decision-making rights through their allocation choices.

In a context where sustainability criteria are becoming increasingly strict, it is possible that some investors will turn away from these products if they disproportionately favor the alignment of values ​​to the detriment of financial returns. In the long term, the success of the Sustainable Development Goals (SDGs) and progress on sustainability will be the true indicators of the correctness of the decisions made by regulators, asset managers and investors.

Asset owners are not mere spectators

Ultimately, it is clear that regulators have considerable influence over the definition of sustainable investing. However, asset owners are not mere spectators. They play an active role, shaping the future of sustainable investing through their choices. Time will tell whether decisions made today, whether to favor investments in the energy transition or opting for more traditional funds, will have helped create a more sustainable future.

The dilemmas of sustainable investing show that the issues go well beyond financial performance. They question values, priorities and how each investor intends to use their resources to shape the future.

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