Choosing what to invest in isn’t easy. After all, it’s your hard-earned money we’re talking about, and you want to make sure your investment pays off. So, if you’ve been thinking about it for a while and still haven’t decided where to invest, we’d suggest you look into ESG investing. This type of investing is sure to bring you satisfaction — both monetary and moral.
What Is ESG Investing?
ESG investing may be a fairly new term, but it’s already taking over the world. If you’re just getting into economy and finance, you’ll hear about its importance over and over again. But what exactly is it, and why are so many Environmental, Social, and Governance people singing praises to it?
Well, ESG stands for Environmental, Social, and Governance. On its own, that may not mean much to you. But when you take a closer look, you’ll see that ESG encourages investing in companies and businesses that operate in conscientious and conscious ways.
So, what exactly does that mean? To put it simply, ESG companies implement practices that are beneficial for the environment and support social justice movements. They also keep an eye on their own operations, making sure that their business is conducted ethically and fairly. Basically, an ESG company isn’t concerned solely with profit — instead, it cares about its long-term impact on society.
Why Invest in ESG
Since ESG is a relatively new concept that gained popularity only in the last few years, you may be a little apprehensive about it. Is it likely to stick around? How safe would your investments be? To help you reach a more informed decision, we’ll take a look at why exactly investing in ESG companies is a good idea.
You’re Not Just Investing in the Company, But in Your Future Too
Environment, social justice, and fair working conditions are things that concern all of us. And it seems that in the past few years, we’ve all become increasingly aware of it and decided that we can no longer tolerate indifference. Governments and legislature are no longer the only ones held responsible — now companies have to do their part too.
And how do you make CEOs realize they need to show some genuine care about pressing global concerns? Well, by supporting companies that implement ESG practices and staying away from those that don’t. Although it may not feel like it, consumers and investors have real power — the power of their wallets. When they dislike a company’s policies, they can simply withdraw their support and thus show that change is necessary.
If investors support only companies that implement ESG, those that don’t will probably look into it too. Over time, it will become almost a requirement for businesses across the globe. And then, finally, we can make some real progress toward creating a better world for ourselves and our children!
Investing in a Company With Good Practices Is Safer
Let’s think of it this way. A company that doesn’t care about its employees, environment, or pressing social issues may be successful for a time. But eventually, it will come under scrutiny, and these unpleasant aspects will be out there for all to see. Then, its reputation may seriously suffer, and its clients may turn their backs on it. In the long run, such a company won’t get far.
But ESG companies have a greater chance at longevity and success. After all, it’s in their core values to be transparent and fair, implement eco-friendly practices, support social justice movements, and promote diversity. Simply put, people can’t find much to complain about when dealing with a company like that.
And, unsurprisingly, that will have a tremendous impact on an ESG company’s reputation. When employees and customers are satisfied, and the business is famous for its activism, it’s sure to get a lot of praise. People will then naturally want to work with and purchase from such a company, leading to its growing success.
So, if you ask us, there’s no dilemma. Investing in ESG companies is always a better choice, even if you disregard how much good they do for society and the environment. Your investments are sure to be safer and pay off more in the long run.
ESG Investing Is Likely to Become the Main Type of Investing
Although it’s still new, ESG investing is already proving to be more than just another trend. If anything, it seems to be growing more popular as the years go by. After all the changes and upheavals that 2020 brought, it’s become hard to ignore all environmental issues, racial tension, and the general need for change.
On top of that, younger generations seem to be more interested in social activism and environmental protection. Millennials already hold some of the spending power, while older Gen Z will soon come into it. These generations either grew up with the internet or are much more comfortable using it than previous ones. Thus, they are more in tune with what is happening in the world and more prone to researching a company’s background before they invest.
If we take that into account, ESG is probably here to stay. And if that’s the case, it might be wiser to get in on it as soon as possible!
In Conclusion
So, should you try your hand at ESG investing? Our answer is definitely yes. After all, you’ll be at the forefront of a change, fighting for the environment, social justice, and better working conditions. On top of that, you’ll probably make some profit too — so it’s a win-win situation!
