Author: Leanne Gaul, CA, Ex-Financial Planner, UTS Academic and Sustainability Researcher
Investment & Sustainable Business Outlook Article: 1 Issue:1 Volume: 1 2026 ISSN: 2982-3226 (Print) ISSN: 2982-3234 (Online) www.accountingbusinesscare.com.au
Abstract: Our planet is on the verge of ecological imbalance. Our social justice, social equity, and economic prosperity are all outcomes and subsets of our planet’s ecological balance. The current state of ecological imbalance is due to anthropogenic economic activities and other human-induced factors, resulting in multiple interconnected risks worldwide.
The return of our business and investment is dependent on these risk factors. If the ecological health of our planet declines, both our present and future social justice, equity, and economic prosperity could be jeopardised. It is time to be a prudent investor by incorporating a sustainability perspective in investment decision-making so that capital allocation for business investment follows the principles of sustainable finance frameworks as laid out in The Principles for Responsible Investment (PRI), Principles for Sustainable Insurance (PSI), Equator Principles (EI), and Principles for Responsible Banking.
Hence, a community of sustainable investors can act as a catalyst for changing the mindset from business- as-usual.
Key words: Sustainability, sustainable finance, sustainable investors, green investors, social impact investors, sustainable investment strategy, climate change, global risks
Citation: Gaul, L. (2026) ‘Why must you be an informed sustainable investor?’ in Kuntal. Goswami (ed.) Investment & Sustainable Business Outlook, Article: 1, Issue:1, Volume: 1 pp. xx-xx
Introduction
Over three decades of my professional and academic experience as a CA, an ex-financial planner, an academic, and a researcher have provided insight into the influential roles of investors and stakeholders in changing business practices towards sustainability values. In recent years, investors have realised the rationality of sustainable investment practices, as it promotes economic prosperity by mitigating environmental degradation and advancing social justice.
In this article, I have provided my normative argument for sustainable investment as a finance professional and as a sustainability advocate. It is important to highlight that this is general advice only. I recommend that, before investing, one should seek professional financial planning advice and invest based on one’s personal risk appetite and financial circumstances.
What is sustainable investing?
The term “sustainable” derives from the “sustainability concept”; hence, “sustainable investors” are those whose investment decisions incorporate economic, environmental, social, and governance factors (Marszk & Lechman, 2023).
In recent years, the sustainable investment market has experienced noticeable growth, leading to a range of new sustainable financial products, including sustainable equity funds, sustainable index funds, sustainable bonds, green bonds, climate action bonds, social bonds, and sustainable loans. Figure 1 depicts the basic characteristics of these sustainable investment options.
Within the broader sustainable investor community, there are various subgroups: green investors, climate action investors, and social impact investors.
Green investors are those whose investment interests are focused on positive environmental outcomes such as resource management, pollution control, waste management, ecosystem conservation, and restoration (Stein, 2024, October 1). Within the green investor community, the climate action investor sub-group focuses on climate mitigation and adaptation-related outcomes aligned with the objectives of the Kyoto Protocol and the Paris Agreement. Climate action investments aim to fund organisational activities to reduce greenhouse gas (GHG) emissions (as GHG emissions lead to rising global temperatures) or to fund green infrastructure (United Nations, n.d.-b). Green investors make investment choices that incorporate climate action and other favourable environmental outcomes, in addition to financial benefits to the investor.
Social impact investors seek a positive social impact in education, affordable housing, employment generation, food security, or socioeconomic advancement and empowerment, in addition to the financial benefits of the investment. The beneficiaries and stakeholders of the social impact investment can include supply chain stakeholders, local communities, vulnerable groups, customers, and broader society (Anheier et al., 2010). Commonly positive social impact themes are diversity, equity, inclusion, and modern slavery (World Economic Forum, 2022, June).
In addition to environmental and social factors, a sustainable investor also needs to consider other economic and governance factors: sustainable procurement and supply chain; board diversity and structure; business ethics policies; corporate transparency and reporting; and executive compensation.
Why should one be a sustainable investor?
Our society and economy are the subsystems of our ecology; hence, living within the ecological boundaries of our planet is the most prudent decision. However, due to over-extraction and other negative impacts of our economic development, the fragile balance of our ecology is at significant risk.
This fact is also evident in the World Economic Forum’s Annual Global Risk Reports. Every year, the World Economic Forum presents the risk perceptions of global leaders and experts on geopolitical, environmental, societal, and technological challenges across the short-, medium-, and long-term horizons.
A trend analysis of risk perception from 2007 to 2020 (as shown in Figure 2) revealed that, since 2011, on average, two to three environmentally related risks, in terms of likelihood and impact, have appeared in the top five of the global risk perception table.
The 2025 Global Risk Report (as shown in Figure 3) also reflected a similar trend. The report presented the top 10 global risks by severity. In the short term, two of the top 10 severe risks will arise from environmental categories, whereas four of the top 10 severe risks will arise from societal risk categories. However, in the long run, the severity of environmental risks will worsen, as five of the top 10 severe risks will stem from environmental categories. In contrast, at the same time horizon, two of the top 10 severe risks will be driven by societal factors.
These worsening environmental and societal risk perceptions underscore the urgency for businesses to embed sustainability values into their strategic decision-making frameworks and operational practices. These environmental and societal risk factors will continue to escalate, negatively impacting societal resilience (World Economic Forum, 2025).
Every investment in economic development has socio-ecological negative impacts; hence, our investment decision must embrace sustainability or ESG principles to safeguard our capital and returns from these risk factors and their consequential negative impacts. Hence, we must be informed, sustainable investors.
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