Actively Integrating ESG Factors into Sustainable Investing

Learn how integrating sustainable development themes can generate solutions that create value for investors over the long term.

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What is ESG?

Environmental
Key environmental issues on which ESG investments focus include air and water pollution, climate change, carbon emissions, energy efficiency, biodiversity, water scarcity, and waste management.
Social
Important social issues considered when making ESG investment decisions include human rights, gender and diversity policies, labor standards, employee engagement, customer satisfaction, and community relations.
Governance
Board makeup, executive compensation, corruption policies, lobbyist activities, political contributions, and auditing structure are the primary governance factors scrutinized to assess a company's risk/return potential.

Creating Sustainable Value
Environmental, Social and Governance (ESG) investments, or Socially Responsible Investments (SRI) as they have previously been known, are no longer the relatively niche investment strategies they used to be just a decade ago. Greater awareness and appreciation for ESG issues such as global warming, social upheaval, and corporate corruption – combined with a growing body of research to show that such strategies may create additional value over the long term – has led to a renewed interest in this area among investors world-wide.

No longer are ESG investments perceived to be purely a risk management strategy or a way to avoid companies engaged in undesirable activities. Instead, ESG investing is increasingly seen as a core philosophy or approach for some of the world’s largest investors. As increased public awareness and appreciation for ESG issues gives way to changing global regulation, policy and economics, identifying companies best positioned to adapt to such an environment potentially stand to gain, creating a lasting trend for years to come. 

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