In today’s era of principled investing, investors actively seek out companies rooted in sustainability. They desire to comprehend the various facets contributing to the resilience and ongoing success of the businesses they support. There is a growing demand for enterprises capable of weathering the most severe crises, while consistently integrating environmental, social and governance (ESG) principles into their daily operations. In this special report, we will delve into ESG investing, providing an in-depth exploration of this modern investment approach.
What is ESG Investing?
ESG investing, also known as sustainable investing, is investing in companies that prioritise ethical practices alongside profitability. ESG investors refrain from investing in stocks of companies that fail to meet specific environmental, social or corporate governance standards. For example, companies known for heavy pollution or subpar labour practices are typically avoided. ESG investing has gained momentum worldwide as many investment funds have adopted this model in recent years.
Understanding ESG Scores
The ESG score serves as a metric to gauge a company’s commitment to environmental and social sustainability. This score ranges from 0 to 100 and evaluates performance based on three core factors: environment, society and governance. A high ESG score reflects commendable performance in these three areas, while a low score suggests inadequate action, potentially leading to losses due to regulatory penalties, environmental crises, and more.
The Global Evolution of ESG Investing
This story is from the September 25, 2023 edition of Dalal Street Investment Journal.
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This story is from the September 25, 2023 edition of Dalal Street Investment Journal.
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