Environmental Social & Governance
'Good’ companies make good investments
Good companies often make good investments. Bad tend to be bad investments.
- Environmental, Social, and Governance (ESG)
- Socially responsible investing (SRI), or social investment
- Impact investing
- Sustainable investing
5 Very GOOD investment reasons:
- Revenue (top line) – new markets, expand existing. Consumer preference. A strong ESG proposition helps companies open new markets and expand in existing ones.
- Costs – substantially reduce by lessening rising operating costs such as energy, raw materials, water and waste. Lower costs mean better profit margins. Less risk.
- Reduced regulatory and legal interventions and associated costs. Regulatory action varies by industry sector. Banks, Automotive, Aerospace, Defence, Technology, Transport, Energy and Materials have 50% to 60% of their profit at risk from potential Government/regulatory sanctions.
- Employee productivity – attract and retain quality, motivated and purposeful people. Bad corporate behaviour can lead to strikes, slowdowns and other employee-led disruptions. Job satisfaction equals better everything. Today people want to work for a company that has a positive impact on the world.
- Better Investment and capital allocation. Better ESG also gives access to cheaper capital or debt. This can be as much as 2%. Capital allocation decisions focus more on the long-term cost versus benefit leading to longer term and more sustainable returns.