what is esg investing?

ESG stands for Environmental, Social and Governance. These three factors are used to evaluate a company's impact on the world beyond just its financial performance. Here is a brief overview of what each factor means:

Environmental

Environmental factors assess how a company impacts the natural world. This includes a company's carbon footprint, use of natural resources, pollution, and waste management.

Social

Social factors evaluate how a company impacts its employees, customers and commodities. This includes a company's labor practices, human rights record, product safety, and customer privacy.

Governance

Governance factors assess how a company is run and how it makes decisions. This includes a company's leadership structure, executive compensation and board diversity.

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why invest in esg?

ESG investing has become increasingly popular in recent years as investors have become more conscious of the impact their investments have on the world. Here are some reasons why investors choose to invest in ESG.

Socially responsible investing

Many investors want to invest in companies that align with their values and beliefs. ESG investing allows investors to support companies that are committed to positive social and environmental outcomes.

Long-term returns

ESG investing can also offer long-term financial benefits. Companies that prioritise sustainability and good governance are often better positioned to succeed over the long term, as they are better equipped to manage risks and adapt to changing circumstances.

Risk management

ESG investing can also help manage risk in a portfolio. By considering environmental, social and governance risk factors, investors can identify companies that may be more vulnerable to risks such as climate change, supply chain disruptions or reputational damage.

how to invest in esg

ESG investing is an investment strategy that takes into account a company's environmental, social, and governance factors in addition to traditional financial analytics. It has become increasingly popular in recent years as investors have become more conscious of the impact their investments have on the world.

By investing in companies that prioritise sustainability and good governance, investors can support positive social and environmental outcomes while also potentially benefiting from long-term financial returns.

Before you begin in investing, it is always best to seek financial advice from an independent financial planner. That way, you will receive advice tailored to your attitude to investment risk, capacity for loss and financial objectives.

If you would like to speak to a financial planner about getting started with investing or reviewing your existing portfolio, get in touch with us today for a free initial consultation from one of our expert advisers.

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H Allen

Client since 2022