Three tips for green investing

Reading time 3 minutes

Published on 03/06/2025

World Environment Day is on 5 June

World Environment Day returns on 5 June, this year focusing on the fight against plastic pollution. Established by the United Nations in 1972, WED calls on governments, businesses and individuals to help protect our global ecosystem - an ecosystem increasingly threatened by economic development that risks endangering the very survival of humanity. You're already protecting the planet when you sort your household waste or save water. But did you know you can also make a difference when you invest your savings?

Green investments

By investing in green finance tools, you can help protect the environment while still pursuing your financial goals. Green finance means taking environmental factors into account - alongside financial ones - when making investment decisions. These factors include reducing greenhouse gas emissions, preventing pollution, and protecting biodiversity.

A common form of green investment is green bonds. These are issued by governments, companies or other organisations that commit to using the funds raised for environmentally sustainable projects, such as building a wind farm or reforesting a degraded area. You can also invest in shares of companies that produce environmentally beneficial goods and services (such as renewable energy), or that have made strong commitments to reduce their carbon footprint. When selecting shares with an environmental focus, you can look at a company's ESG rating, particularly the E (Environmental) component. These ratings are provided by specialised agencies and are often used by investment funds and ESG-focused exchange-traded funds (ETFs) when building their portfolios.

In general, investment products that help fund environmentally sustainable economic activities can be considered green. The European Union has published a list of such activities, based on the criteria set out in a regulation known as the EU Green Taxonomy. Companies whose revenues and investments are largely aligned with this taxonomy are seen as contributing more significantly to environmental sustainability.

A few tips

The goal of investing your savings is to grow your capital or at least protect its purchasing power against inflation. If you're thinking of buying investment products such as funds or ETFs that include environmental considerations, here are three useful tips for making informed choices:

• read the product information documents carefully. These include the Key Information Document (KID), the fund rules and the prospectus. Check whether the risk level, expected return and investment horizon match your financial needs;
• watch out for greenwashing. This is when a product or company is falsely marketed as environmentally sustainable. Again, read the product information carefully - these documents must include details on the environmental characteristics of the investment;
• express your sustainability preferences. When you speak to a bank or financial advisor, you'll be asked to fill out a MiFID questionnaire. Use this opportunity to state your interest in sustainable investments. The advisor should explain what ESG factors are and help you understand the difference between sustainable and non-sustainable financial products.

To learn more

To find out more about sustainable finance, visit our dedicated section.

If you'd like an overview of climate change and the shift towards more sustainable development, take the free online short course (onliy in Italian) developed by Politecnico di Milano in collaboration with Banca d'Italia.

For more information about World Environment Day 2025, visit the official website.