Alarmed at the impact of companies damaging the environment, a new generation of investors are looking to support companies that fund future sustainability and social responsibility, citing an increased awareness of climate change as one of their reasons. With more availability and choice in New Zealand, people now have the power to choose, bringing about an increasing shift towards ethical and responsible investing by incorporating Environmental, Social and Governance issues into their investment decisions.
Environmental, Social and Governance (ESG) criteria are a group of standards used by social conscious investors to screen investments. Investors may consider a number of different ESG factors, metrics and data when looking to adopt an ESG investing strategy as part of their investment portfolio. These factors typically include industry-specific key issues such as climate change, human capital and labour management, corporate governance, gender diversity, privacy, and data security, among others. Remy Briand, Managing Director of MSCI ESG explains ‘ESG investing is the consideration of environmental, social and governance factors alongside financial factors in the investment decision–making process.”
However, it takes time for a company to establish a strong ESG team culture that is capable of long-term initiatives, research, and development that results in strong ESG business fundamentals and that can also make a profit. But as many large shareholder’s lobby companies for improvements in their ethical practices they are able to apply pressure for real change.
As more people realise that companies with a sustainable approach can also produce great profits and make your investments more resilient long-term – Responsible Investing is becoming the new norm.
If you would like to go one step further and talk to your adviser about Responsible Investing, please call our office or visit our contact us page.