ESG investing return overview

Ethical investing doesn’t mean forgoing profit

It has for a long time been believed that the practice  focused on protecting and safeguarding the world around us would not lead to the highest returns and people have been willing to trade off certain profits in exchange for a better world, unlike “hardcore” investors who are solely focused on making as much money as they can even if it ends up damaging the ecosystem.

The truth of the matter is that this thinking is actually archaic in nature and does not correspond with the data. Long term ethical investments are both sustainable and offer attractive returns and these investments offer a greater sustainability in the future. 

What is ESG investing and can it give you greater returns?

Strategies that take a company’s environmental, social and governance factors into consideration is an ever expanding market it grew to more than $30 trillion in 2018 and has estimates that this may to $50 trillion over the next decade.

ESG Investing strategies are not new, however, there is increased interest and momentum from both new and existing investors and shareholders that are demanding action.These demands are making the stocks and opportunities more exciting and increasing demand, however many companies have failed to realize the consequences that fail to adapt.

The Trump administration also has rolled back environmental regulations in a bid to revive coal mining. The industry, which had suffered a steady decline in employment before Trump, has seen payrolls stabilize but it’s tiny, with just 53,100 workers. Only 2,200 have been added since early 2017. However, this increase in jobs is still a net negative when you consider the 20,000 jobs lost in the solar industry.

However, even with a politically uncertain future, the solar industry is continuing to regain ground despite the current head winds. As part of our investment analysis methodology all our investments are evaluated through an ESG lens alongside traditional metrics like capital allocation and cash flow. These evaluations, that were once thought to come at the expense of returns, ESG strategies have proven that they can be market-beating.

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