International ESG Day 2024 is a reminder of how fragile the environment is, and the commitment needed to follow a sustainable way of life to preserve our children’s future.

As individuals, we can ensure that we only invest in sustainable companies that follow ESG principles. ESG principles allow for better management and transparency, leading to lower risk and better growth over the long term.

“With climate change, socio-economic disparities, and governance challenges becoming central issues of our time, it is crucial for all stakeholders—be it businesses, governments, or individuals—to adopt an ESG-centric approach. The celebration of International ESG Day serves as a reminder of this commitment and the shared responsibility to build a better tomorrow.” – The ESG Institute

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What is ESG or Sustainable Investing?

Ethical or ESG investing means investing your money in companies that strive to improve the world by reducing their carbon footprint on the earth. These companies follow ESG (Environmental, Social and Governance) principles to improve their performance in these areas.

“At its core, ESG investing is about influencing positive changes in society by being a better investor.” Hank Smith – head of investment strategy at The Haverford Trust Company.

Companies follow ESG criteria to safeguard the community in which they work. Investors who invest in companies following ESG principles get a holistic view of these companies and can also mitigate any risks, as the companies are more transparent and better managed.

 

Environment
This is the impact that a company has on the environment. It includes carbon footprint reduction, such as using less harmful chemicals or even water in its manufacturing processes and striving to increase sustainability throughout its supply chain.
Social
This is a company's social impact internally and on the broader community, such as inclusiveness in the workplace, racial diversity, employee relations, and hiring practices.
Governance
This is how the company’s board and management drive positive social change, including how they interact with board members, executive salaries, and even diversity in management.

As an ethical investor, look towards sustainable green funds that follow ESG practices to reduce their carbon footprint and environmental impact on the earth while offering good returns that often outperform regular funds over the long term.

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What are the Benefits of Switching to ESG Investing?
  • Companies that follow ESG principles are mitigated against risk and are less likely to have negative events, environmental disasters or labour market issues. Investing in these companies may lead to lower risk exposure.
  • Studies indicate that companies with robust ESG practices tend to outperform their peers over the long term. Efficient resource management, effective governance, and positive social impact contribute to sustained growth and resilience.
  • Many investors prefer investing in companies that align with their own ethical and social values. This can provide a sense of satisfaction by supporting companies that demonstrate responsible behaviour.
  • It is a practical solution to help reduce our carbon footprint on the earth and oceans.
  • ESG companies contribute towards global sustainability.
  • ESG investments tend to be less volatile as companies are regulated better.
  • Employee engagement is often greater in companies following ESG principles.
  • Reduces overall emissions and greenhouse gases, thus removing carbon from the atmosphere.
  • ESG companies are more resilient, innovative and adaptable to change. An ESG focus encourages companies to innovate and adapt to changing societal and environmental needs. This can lead to developing new technologies, products, and services aligned with sustainability goals.
  • With growing regulations concerning environmental protection, labour practices, and governance, companies that address ESG concerns proactively are better positioned to comply with evolving regulatory requirements. This proactive approach mitigates regulatory risks and enhances corporate sustainability.
Sustainable ESG Investing

ESG or sustainable investing is a way to help reduce companies’ impact on the environment and global warming while simultaneously earning good returns and building wealth. For more information about sustainable investing, chat with a financial advisor today.

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.

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