ESG Investing: How Is It Different

One of the hottest topics in corporate boardrooms and among institutional investors is the purchase of shares that have a strong environmental, social, and governance profile, or ESG investment.

ESG, on the other hand, goes much beyond mere words. In 2019, endowments and foundations used ESG factors in investment decision-making at a rate of 42%, according to a new Callan Institute analysis.

The infographic below, An Overview of ESG Investing, covers the key causes of this rise in interest in ESG investing. Any investor interested in learning more about ESG, as well as any business looking to boost its value and capacity to attract investment capital, should start by reviewing the infographic.

It is well known that Millennials, who already have a significant and growing impact on investing, place a high importance on ethical company operations. The link between socially responsible corporate practices and increased earnings and, thus, improved investment prospects is less well understood.

Companies with high ESG scores are less likely to experience regulatory fines, shareholder revolts, public scandals, and other potentially negative, value-destroying events. Ethics-driven employers benefit from lower employee turnover rates and more engaged, productive workforces. High-scoring ESG companies are the best long-term investment opportunities due to these and other characteristics. To learn more, consult the related resource.