In a world teeming with environmental and social challenges, the role of sustainable finance is crucial. It offers a unique opportunity for investors to make a tangible impact, aligning their financial goals with the broader objectives of global sustainability. However, amidst the growing buzz, there’s a cloud of confusion about what sustainable finance genuinely represents and achieves. This series of articles demystifies the concept, guiding you through the practicalities of constructing investment portfolios that not only yield returns but also contribute positively to our planet and society.

If you want to read more, the two articles are available on my Medium account. In these two assignments, which we transformed into articles, we constructed several portfolios in the energy and utilities sectors—areas with significant carbon impact.

We began by sourcing and processing the data. Then, we built the efficient frontier to identify potential portfolios, illustrating the trade-off between risk and return. Gradually, we incorporated extra-financial criteria such as ESG scores and carbon intensity (tonnes of CO2 per million dollars) to understand how to reduce the carbon impact of a portfolio while maintaining attractive returns.

My takeaways