ESG (Environmental Social Governance) investments assume
a responsible and ethical approach to the company's
investment portfolio forming.
It means checking the company for compliance with environmental, social, and management principles. After analyzing the company's activities, private investors or investment funds decide to refuse or agree to invest in the business. The company risks being left without investment funds if its approach to business does not match the moral principles of ESG funds. For instance, the use of child labor, large emissions, or harm to the consumer's physical and mental health during manufacturing will guarantee the exclusion of the organization from the ESG portfolio.
For example, if you try to reduce the use of plastic in your daily routine and are worried about climate change, you can invest in companies with environmental initiatives.
Try to imitate the investment funds' activity: choose the companies that comply with your values from a list of blue chips (the most liquid securities). In this way, you gain the opportunity to make money without compromising on your principles.
The principles of ESG
Ecological
Reflects the environmental concerns of the company, including the amount and type of energy used, waste generated, degree of environmental contamination, and whether natural and animal resources were spared.
- Climate change and carbon emissions
- Air and water pollution
- Biodiversity
- Energy efficiency
- Deforestation
- Waste management
- Water scarcity
Social
Demonstrates the company's attitude towards employees, partners, and customers. Defines business relationships inside and outside the company: whether the company cooperates with suppliers sharing the same values, rewards employees for overtime work, etc
- Customer satisfaction
- Data protection and privacy
- Gender and divercity
- Community relations
- Employee engagement
- Human rights
- Labor standarts
Managerial
Describes the effectiveness of management policies and compliance with the legal and social rights of all business participants (honest and transparent accounting methods, accuracy of financial statements, punctual wage payments, and adherence to the terms of business agreements).
- Board composition
- Executive
compensation
- Audit committee structure
- Bribery and corruption
- Lobbyings
- Political contributions
- Whistle-blower schemes
-
Responsible investing is investing in
securities of issuers that contribute to the
development of society. -
The ESG factors comprise ecology,
social development, and corporate
governance. -
Green bonds are securities whose
issuer directs the money raised toward
environmental projects. -
To become a responsible investor,
you must analyze ESG ratings, buy green
bonds or invest in ethical funds.
Learn more about our Strategies
Talk with out team today.