Why ESG Investing Should Matter To Us
ESG Investing is considered an ethical form of investing. It has been around for well over a century. Since companies and individuals started investing, many people have made investment decisions based on their own beliefs and values. For example, there have been investors that have decided to purchase stock in companies in line with their religious views.
In this article we will be talking about why you may be interested in ESG investing and why it should matter to those interested in making an ethical investment. This kind of investing has proven to be quite effective for those who want to invest for a long time rather than just do short-term trading and make a quick buck.
Why does ESG investing matter?
It gives us a peek at ethical companies
You’ve heard news stories about companies being under attack for things like poor working conditions or environmental violations. A company with an ESG report is one of the best options you have to make sure the companies you have invested in don’t have these problems.
If the company’s ESG report is highly rated, ethical investors will be more interested because there is a high probability that these companies will be successful. This also provides a distinct signal. It will help you distinguish the most transparent companies from the ones that are not. Companies that do not release an ESG report are usually more scrutinized by investors. The same can be said for companies that are rated poorly across the board.
It gives companies the opportunity to be honest
Investors want honesty and integrity from a company they want to invest in. But to not get it in return is a waste of time. Needless to say, the days of saying one thing while doing the other are quickly ending. Companies should be looked under a microscope to ensure that they are honest with their disclosures.
This includes financial disclosures, their working conditions, how they are treating their employees, and so on. Honesty is always the best policy. It can also help sway the decision of one ethical investor.
The last thing an investor ever wants to do is put their money into a company that has misled the public (which can be considered criminal). Due diligence is always important before investing in a company that is supposed to bring positive change to the world.
Final Thoughts
ESG investing should matter to those who want to invest their money into a company. Especially those that talk the talk and walk the walk when it comes to making a positive impact. You may be someone who is environmentally conscious while investing in companies that share the same views as you do.
Regardless, ESG investing has existed in many forms. While investing in companies based on religious and political beliefs still holds strong, the same can be said about the hot issues talked about around the world. Agreeing with the issue on climate change for example can lead you to make smart investment moves or whether or not a company is treating their workers fairly.
At the end of the day, ESG investing should matter to you based on your own ethics and beliefs.
