Environmental, Social And Corporate Governance (ESG) is an evaluation of an organization’s shared conscientiousness for social and environmental factors. The following is a brief description of each factor.
Environmental
Environment standards can entail energy use, waste pollution, conservation of resources and the treatment of animal products. The criteria could also be used to evaluate potential environmental risks.
Social
Social criteria assess the firm’s relationship in business relations with clients. Is It working if the suppliers are in line with a standard of value? Does the company offer volunteering? Does the company regard employees’ protection first of all as a matter of human rights? Can an individual consider his and her own interest?
Governance
Governance criteria refers for instance to how companies use honest accounting methods that allow shareholders free choice. Those concerned about conflicts of interest may also want assurance that corporations avoid conflicts of interests about its decision of boards and don’t misuse politically motivated contributions to obtain unduly favorable treatment.
How successful is ESG investing ?
In less than 20 years, sustainable investing has grown from an isolated UN corporate responsibility initiative to a global phenomenon representing approximately USD 30 TB of assets under management. A new report from Morningstar estimates US money was invested into ESG – aligned goods and services in 2019 with revenue up 525 per cent from 2015.
Moreover, the appetite of investors for sustainable investing has been increased by the good financial performance of ESG products which has been equal, and even higher, than traditional products over the past few years.
InvestProfilerassesses the sustainability preferences of investors. Thanks to it, financial institutions can offer products more adapted to the profile of their investors. If you have any questions about how it works, do not hesitate to send us a message.