In a world where sustainability is becoming a major criterion of choice for consumers and investors, the attractiveness of sustainable investments is constantly growing. Investing sustainably means choosing to contribute positively to the future of our planet, while aiming for financial profitability. In this context, the 3rd pillar offers an interesting opportunity to combine personal pension with a commitment to a greener future.
What is a so-called sustainable investment?
Investments made via a 3rd pillar are often made by placing money in investment funds. This mechanism allows investors to diversify their investments while benefiting from tax advantages and long-term growth potential. In the context of the 3rd pillar, choosing investment funds allows individuals to benefit from professional management of their investments, in line with their risk tolerance and their personal values. So what defines an investment fund as sustainable?
ESG criteria
ESG (Environmental, Social and Governance) criteria have become a standard in the evaluation of sustainable investments. They make it possible to analyze the impact of companies on the environment, their impact on human relationships (employees, consumers, communities) and their governance. However, assessing sustainability based on ESG criteria can be complex. A fund can achieve an excellent overall ESG score by performing well in social and governance terms, while at the same time displaying poor environmental performance. This indicates that while ESG criteria offer the big picture, they do not focus exclusively on environmental impact.
Ethical criteria
In addition to ESG criteria, some investors adopt specific ethical criteria, excluding investments in sectors such as tobacco, arms, coal, palm oil, and sands
bituminous. While these criteria do not focus directly on sustainability, they reflect a responsible and ethical approach to investing, which may align with some of your personal values.
More advanced criteria
There are funds that go beyond ESG and ethical criteria by investing directly in companies that have a tangible impact on the planet. These companies may specialize in renewable energy solutions, nature conservation, or aim for ambitious goals to reduce CO2 emissions. These funds are generally considered to be the most sustainable, but their specific criteria vary from company to company, making comparison more complex.
Sustainability criteria therefore require a thorough analysis of the funds and their objectives to determine whether the investment has a real positive impact on the environment and climate.
How to find sustainable funds and investments for your 3rd pillar?
To integrate sustainability into your 3rd pillar, it is crucial to start by evaluating and selecting the investment solution that best fits your goals and values, whether for A pillar 3a or pillar 3b. Let's look at the various options.
Classic 3rd pillar
The classic 3rd pillar offers 100% security, without direct investment in investment funds. However, it is important to understand how your money is used by banks or insurance companies. Even if these institutions guarantee all of your capital, they can invest your money in various projects such as real estate, funds, or loans. To ensure the sustainability of your traditional 3rd pillar, it is relevant to learn about the investment practices of the chosen institution and to favor those that are committed to environmentally friendly and socially responsible projects.
3rd mixed pillar
The 3rd mixed pillar allows for greater customization, combining secure elements with investments in investment funds. This model offers the flexibility to adjust the ratio between security and fund investments. For those who want to promote sustainability, the crucial aspect lies in choosing sustainable investment funds. This means opting for funds that not only meet ESG criteria but also invest in companies and projects that have a proven positive impact on the climate, the environment and the planet.
3rd pillar 100% funds
For investors who are more likely to take risks in search of maximum sustainability, a 3rd pillar composed entirely of investment funds may be the solution. This option allows full investment in funds that focus on sustainable, ecological and social initiatives. In this context, it is essential to conduct a thorough analysis of the funds offered, examining their investment strategy, their sustainability history and the real impact of their investments.
Check out our article on The types of 3rd pillar investments to learn more about how each type of solution works.
How do you compare the 3rd sustainable pillars?
Comparing the 3rd sustainable pillars requires particular attention to the composition and objectives of the funds, as well as to the investment policy of the company or bank chosen. Here's how to make the right choice.
Analysis of the composition of the funds and their objectives
As mentioned in the “What is sustainable investment” section, understanding the sustainability of an investment involves closely examining the composition of funds and their investment criteria. It is essential to determine whether funds are actually investing in businesses and projects that have a positive impact on the environment and contribute to sustainable development. Check if the funds follow responsible investment principles and if they are transparent about their activities and sustainability results.
Bank or insurance company valuation
The sustainability of a 3rd pillar also depends on the financial institution with which you choose to engage. Evaluating the bank or insurance company is crucial to understand how they use your money and whether their own operations meet high standards of social and environmental responsibility. A company that actively engages in sustainable and responsible business practices is more likely to offer investment products that are aligned with these values.
Consultation with a specialized financial advisor
Faced with the complexity of the products available and the diversity of sustainability criteria, calling on a specialized financial advisor can be a wise approach. An expert can help you navigate the many options on the market, comparing 3rd pillar solutions based on their financial performance and sustainable impact. An advisor can also tailor recommendations based on your financial goals and sustainability values.
Conclusion
Comparing the 3rd sustainable pillars is not a simple task, but it is an essential step in aligning your investments with your values and contributing to a more sustainable future. By taking the time to analyze the options available and seeking the help of professionals, you can make the right choice that supports your personal values and financial goals while promoting a positive impact on the planet.
