Investing in Well-Being: The Psychological Benefits of Sustainability
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Understanding the Link Between Sustainable Investments and Well-Being
The current global economy emphasizes growth at the expense of well-being, leading to pressing environmental crises such as climate change, pollution, and biodiversity loss. These issues not only threaten our planet but also negatively impact our mental and physical health. For instance, the climate crisis has been linked to an increase in the frequency and severity of wildfires.
A significant contributor to this problem is the prevalent mindset of “grow now, clean up later,” which prioritizes immediate economic expansion over long-term sustainability. This approach often results in greater costs down the line, making it crucial to explore alternative economic models that prioritize well-being.
In my earlier article, “6 Ways We Need To Change Our Global Economy To Save Our Planet,” I discussed various strategies to foster a sustainable economy, such as re-evaluating Gross Domestic Product (GDP) as the primary economic indicator and eliminating harmful government subsidies. While these changes require systemic shifts, individuals can also make impactful choices through their financial decisions.
When we spend or invest our money, we are effectively casting a vote for the products and services we believe in. Sustainable investments, which consider environmental, social, and governance (ESG) factors, empower us to support initiatives that align with our values. These investments, also referred to as ethical or socially responsible investments, can yield both financial and non-financial returns.
The Importance of ESG in Sustainable Investments
ESG stands for environmental, social, and governance, and it serves as a framework for evaluating the sustainability of investments. While traditional investments focus solely on profitability, sustainable investments often offer long-term benefits that contribute to enhanced well-being, both financially and psychologically.
As highlighted in my piece, “Why Sustainability Innovations Benefit Firms’ Competitiveness,” embracing sustainability can lead to increased value, reduced costs, and improved intangible assets. Moreover, these investments can enhance our psychological well-being by addressing both objective standards of living and subjective experiences of life satisfaction.
Impact on Health and Psychological Well-Being
One significant way sustainable investments influence psychological well-being is through health improvement. Health encompasses physical, mental, and social well-being, and research indicates that lower psychological well-being is often linked to chronic health issues and reduced life expectancy.
Ensuring that sustainable investments focus on health can create a causal relationship—where one element directly impacts the other—rather than merely a correlation. For instance, investments that promote healthy lifestyle choices, such as physical activity and stress management, can lead to enhanced psychological health.
Enhancing Experiential Wealth
Another avenue through which sustainable investments foster psychological well-being is by enhancing experiential wealth over material wealth. In capitalist societies, material wealth is often equated with happiness. While this holds true to an extent—particularly in poorer nations—wealthier societies see a shift in focus toward psychosocial well-being.
As individuals accumulate wealth, the importance of experiences—rather than material possessions—grows. Studies show that buying experiences often leads to greater happiness than purchasing physical items. Therefore, financial investments should prioritize industries that foster experiences, such as travel, education, and community engagement.
Conclusion: Shifting Focus in Financial Investments
To use financial investments for sustainable development, we should prioritize enhancing psychological well-being instead of merely focusing on GDP growth. This can be achieved by investing in initiatives that improve health and experiential wealth.
Practical Steps for Sustainable Investing
Here are some actionable ways you can practice sustainable investing in your daily life:
- Consider gifting experiences instead of physical items.
- Opt for second-hand purchases to promote sustainability.
- Rent items like tools or vehicles instead of buying them.
- Support start-ups that focus on enhancing well-being.
- Contribute to initiatives that promote health and experiential wealth, such as the Xplore Nature YouTube channel, which offers serene nature walks around the globe:
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Which of these practices can you incorporate into your routine? Do you have additional ideas to share? Your input can inspire others to take meaningful actions toward sustainable investing!
Credit
This article is derived from:
Gärling, T., & Jansson, M. (2021). Sustainable investment: Consequences for psychological well-being. Sustainability, 13(16), 9256.
Adrian Grenier discusses building sustainable businesses and making informed investment choices that prioritize long-term well-being.
Evan Tylenda explores the principles of socially responsible investing, emphasizing its impact on individual and collective well-being.