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ESG investing, or investing in firms with strong environmental, social, and governance profiles, is one of the most discussed topics in boardrooms and among investors.
What Does ESG Stand For?
Before investing, many of investors analyze a company’s ethics and environmental impact. Social and governance factors are more significant to these investors in terms of the work environment and the company’s overall goals. These elements are equally important to some investors as financial aspects when deciding whether or not to invest their hard-earned money in a company. ESG investing means considering a company’s strategies and accomplishments in the areas below:
- Environmental: Future investors want to know what steps companies are taking to safeguard the Earth’s resources while maintaining a sustainable business model. What is the company’s environmental policy?
- Social: Some investors believe that knowing a company’s relationships with its employees and vendors is equally critical. Do they give everyone the same opportunity? Are they approachable and friendly to other businesses, customers, and the community in which they operate? What role does the company play in the growth and prosperity of the community?
- Governance: ESG investors are also curious about the measures in place to monitor a company’s board of directors and management team. What rules and procedures are in place to ensure that the company is run properly and fairly, and that all employees, regardless of their demographics, have an equal chance?
The infographic comes in handy in this situation. Regulatory fines, dissatisfied shareholders, public humiliation, and other potentially negative, value-obliterating events are less likely in companies with high ESG scores. Furthermore, socially responsible firms have lower employee turnover and a more engaged and productive staff. High-scoring ESG companies are good long-term investment opportunities because of these and other features. To learn more, continue reading.
