Investment Strategy, Management and Portfolio Rebalancing
ESG (Environmental, Social and Governance) investing refers to a class of investing that is also known as “sustainable investing.” This is an umbrella term for investments that seek positive returns, as well as positive long-term impact on society, the environment, and the performance of the business.
There are several different categories of sustainable investing. They include impact investing, socially responsible investing (SRI), ESG and values-based investing. Another school of thought puts ESG under the umbrella term of SRI, which encompasses ethical investing and impact investing.
The Financial Times Lexicon defines ESG as “a generic term used in capital markets and used by investors to evaluate corporate behavior and to determine the future financial performance of companies.” It is considered by many individuals and investment professionals as an important factor to evaluate investment opportunities and project the future financial performance of companies. The Financial Times Lexicon adds that ESG “are a subset of non-financial performance indicators which include sustainable, ethical and corporate governance issues such as managing a company’s carbon footprint and ensuring there are systems in place to ensure accountability.” They can be factors in investment considerations, used in risk assessment strategies incorporated into both investment decisions and risk management processes.
According to Environmental, Social and Governance Issues in Investing: A Guide for Investment Professionals: “There is . . . a lingering misperception that the body of empirical evidence shows that ESG considerations adversely affect financial performance.” they add that, “for investment professionals, a key idea in the discussion of ESG issues is that systematically considering ESG issues will likely lead to more complete investment analyses and better-informed investment decisions.”
BlackRock, the world’s largest money manager, is one of Wealth Vision Advisors’ strategic partners within the sustainable and socially responsible investment landscape. Click here for more information relating to Environmental, Social and Governance investing: