One of the hottest topics talked about in corporate board rooms and among institutional investors is ESG investing — that is, investing in stocks with positive environmental, social and governance profiles.
ESG is much more than mere talk, however. A recent study from the Callan Institute revealed that the use of ESG factors in investment decision-making doubled to 42 percent in 2019, with endowments and foundations leading the way.
Several reasons explain the growing interest in ESG investing — the most prominent of which are described in the infographic below, An Overview of ESG Investing. For any investor seeking a fuller understanding of ESG, and for any company interested in maximizing its value and ability to attract investment capital, the infographic is an excellent place to start.
It is well understood that Millennials, whose impact on investing is already significant and rapidly rising, place great value on socially responsible business behavior. What is perhaps less understood is how socially responsible business behavior translates into making a company more profitable, and thus, a better investment opportunity.
The infographic is helpful on this issue, too. Companies with strong ESG scoring have less exposure to regulatory fines, shareholder revolts, public scandal, and other potentially devastating, value-obliterating occurrences. In addition, companies that treat employees in a socially responsible way are less likely to experience turnover and more likely to have an engaged and highly productive workforce. These qualities and others make high-scoring ESG companies excellent candidates for strong long-term returns. To learn more, continue reading.
