It’s Just Good Business: Using ESG in the Investment Process

Incorporating sustainability analysis in an investment strategy may help uncover opportunities and avoid potential risks.

Choosing investments that align with personal values is becoming more mainstream, for many reasons.

  • Following sustainable manufacturing practices may give companies long-term competitive advantages over companies that don’t.
  • In the past, evaluating these types of opportunities and risks has been difficult, and somewhat subjective.
  • But today, considering environmental, social, and governance factors — ESG — as part of the investment process can also be a smart strategy for pursuing long-term returns.
Investing involves risk, including the risk of loss.  Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices; therefore the universe of investments may be limited and investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. This could have a negative impact on an investor's overall performance depending on whether such investments are in or out of favor.