It is widely accepted that action needs to be taken to protect and sustain our natural environment for future generations. As far as investing – there is without doubt a growing portion of the population consciously seeking to incorporate environmental, social and governance (ESG) factors to their investment strategy.
Where it was once the view ESG investing meant “exclusionary,” ”poor performance,” and “only for the idealist” think again. Today – there’s as much emphasis put on returns as on doing good. This said, it would be disingenuous for an investor to think ESG but driven by investment returns. So; you’ll need to be clear whether you’re a truly sustainably minded or returns driven investor.
ESG investing does follow the broad theory of investment, for example; determine an asset’s intrinsic worth, asset allocation and diversification but also incorporates environmental, social, and governance risks into the investment process. This means carefully assessing and evaluating the investment impact on such things as:
- Quality Education
- Clean Water and Sanitation
- Affordable and Clean Energy
- Industry Innovation and Infrastructure
- Responsible Consumption and Production
- Sustainable Cities and Communities