Supporting growing ESG investing with proper governance
Ethical and sustainable investing (ESG) has gained popularity recently and even more so in the UK, where ethical investing has been around since the 1980s. So it isn’t surprising that the UK is the second-highest country for ethical and sustainable investing. Over the past few years, more than 50% of investors in the UK have increased their holdings in sustainable investments.
ESG investing relies on making investment decisions in companies not only for monetary benefit and growth. It also considers a company’s commitment to positively impacting the environment and contributing to change. It stems from ideologies you might be adopting in your daily life. These include recycling, watching fuel consumption, reducing single-use plastics, and even reducing meat consumption.
That’s why often ESG investing depends on personal preferences. You might aim at societal help or climate improvement and avoiding harm or condoning it when making such investments. So, it’s essential to make investment choices that are aligned with your personal preferences.
Climate changes fuelled the increase in ESG investing. Investors worldwide are seeing the harm that has come from global warming. Rising sea levels and warmer temperatures affect everyone and are an increasing concern for our planet. So investors today plan to invest their money where it can make a positive difference on the plant. They want to work with companies that have an ethical ethos they feel aligns with theirs.
But are ESG investments overvalued?
It’s often a misconception that you have to forgo profits when investing environmentally and sustainably. Instead, companies following ESG policies are more likely to be more successful over time. They also have fewer risks, considering ESG investing would lead a company to avoid corruption, bribery, and fraud.
ESG factors help you choose companies and eliminate them. Some companies are well-managed and prove to be attractive investments. In others, you’d risk the effects of regulatory changes, environmental changes, and customer attitudes. ESG funds also invest in big tech companies that have had a strong performance this year due to the pandemic. Plus, the companies they work with are fit for the future.
Still, investors are looking for more clarity concerning their ESG investments. They require updates on how their money is being used. You might be worried that ESG investments are more popular than substantial.
Popular ESG investments should establish governance to ensure investors remain confident in their investments. Companies should assure investors that they’re working for them and not ripping them off. Plus, they should prove that they’re continuing to work to make the world a better place for future generations.
The pandemic has led many people to think about the environment, improve the climate, and maintain healthy habits. So, it’s important that ESG investing grows and supports companies truly working towards these goals. To make ESG investments, get in touch with one of the financial advisers from our directory.
Are you a financial advisor?
Publish your profile for free and find new clients!Fill in your request