Environmental, Social and Governance (ESG) investing is increasingly becoming a phenomenon on the world’s capital markets. ESG is a demand-driven aspect of investing, as today’s investors, especially the younger generations (partly gen. Y, the millennials, and younger), are not only concerned with the return and risk of their investments, but also the impact they are making with them. This impact can range from workplace diversity to environmental footprints, including hundreds of factors that are examined periodically for a growing number of companies worldwide. Based on their factor scores, companies are ranked and benchmarked against each other.
Generally the goal of corporations is to maximize profit and the return on investment for shareholders. Until the beginning of the century environmental pollution was considered to be a price to pay for faster growth and profit, now, however, we are witnessing that pollution is starting to reduce economic growth. Money spent on environmental protection, such as clean air and water, is not just a cost, it is an investment that produces a measurable return.
To get a better grip on the exact environmental values of ESG, we have prepared a thorough overview on what values are factored into the ESG theory.
The environmental component requires research into a variety of elements that illustrate a company’s impact on the Earth, in both positive and negative ways.
Asset owners and portfolio managers overseeing trillions of dollars seek to incorporate ESG considerations into their investment process where investment firms have a unique sales opportunity to combine the product-level ESG features of an investment with the clients’ profile based on their ESG preferences and recommend products that suit them best in a hybrid advisory model. In order to understand where to start, click here and download our fresh whitepaper, which gives a detailed overview of the growing popularity of ESG investments and explains the benefits of incorporating ESG-based profiling features in the investment ecosystem.
Stay tuned. We are going to publish two additional blog posts in this topic about S(ocial) and G(overnance).
[1]https://arabesque.com/2019/09/24/over-a-third-of-the-worlds-200-largest-companies-do-not-fully-disclose-their-greenhouse-gas-emissions-according-to-new-analysis-by-arabesque-s-ray/
[2]https://www.marketwatch.com/story/ranked-saudi-aramco-chevron-and-other-top-companies-responsible-for-one-third-of-all-carbon-emissions-2019-10-09
[3] https://www.trvst.world/inspiration/companies-that-use-renewable-energy/