What is it?
ESG investing is a style of “socially responsible” investment that focuses on a companies impact on its people, environment, and stakeholders as well as the opportunity for financial return.
So, what does it stand for??
E is for Environment – what is their environmental footprint? Do they have a positive or negative impact on the wider environment?
S is for Social – what social impact does the business have? Do they treat their staff and supply chain well? Do they support the local community?
G is for Governance – how well is the business governed? Are the management structure and people suitable for the business? Does the business have appropriate policies in place to manage and protect its performance and profits?
How popular is ESG investing?
The answer is, it’s very popular. According to the Financial Times, 2013 saw less than $2 trillion invested sustainably but by 2019 this had increased dramatically to $31 trillion.
The ESG investing world is growing rapidly and is being driven by investor choice and businesses moving away from “unsustainable” operations. Improving their governance, environmental and social impacts, in line with the shift in perception as to what “good performance” looks like.
Who decides if a company is ESG?
Whilst there is no predetermined definition of what criteria exactly constitutes ESG, most fund managers will use a process based around positive and negative screening. Positive screening is selecting a company because of something it does, negative screening being a selection based on something it doesn’t do.
How can I make ESG investments?
As this area of investing grows in popularity access to ESG based funds is becoming more and more mainstream.
If you would like to know more about ESG investing, how it may suit you and how we can ensure through risk profiling that your investments are suitable for your goals and circumstances please get in touch.
Our services relate to certain investments whose prices are dependent on fluctuations in the financial markets beyond our control. Investments and the income from them may go down as well as up and you may get back less than the amount invested. Past performance cannot be used as a reliable prediction of future performance.
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