ESG investing

What is ESG investing?

ESG investing stands for environmental, social, and governance investing. It involves integrating non-financial measurement factors into investment decisions, focusing on a company's overall performance and footprint rather than just its short-term financial metrics.

This investing approach considers a broad range of issues, some of which are listed below:

• Environmental factors include climate change, pollution and waste management, resource use and conservation and nature, biodiversity and ecosystem impact.
• Social factors cover human rights, diversity and inclusion, labour standards, community engagement, modern slavery and child labour, equal opportunities, and food supply.
• Governance factors involve company management aspects such as board composition and structure, executive remuneration, risk management and compliance, and anti-corruption and ethical business practices.

These factors collectively contribute to determining a company's ESG score, which guides investors in creating more sustainable investing strategies.

What is the primary goal of ESG investing?

The primary goal of ESG investing is to integrate environmental, social and governance factors into investment decisions to achieve long-term, sustainable returns while promoting positive social and environmental outcomes. This approach helps align investments with sustainable values and supports companies committed to responsible practices and positive societal impact.

Recognising the growing importance of sustainability and responsible business practices, ESG will become and even more important factor in future investing, shaping investment decisions and influencing market dynamics.

ESG vs Impact Investing

ESG investing integrates environmental, social, and governance factors into investment decisions, aiming for sustainable returns. Impact investing focuses on generating positive social and environmental impact alongside financial returns, often targeting specific social or environmental outcomes. ESG considers broader sustainability factors, while impact investing focuses on measurable impact alongside financial performance.

SDGs and ESG investing

The Sustainable Development Goals (SDGs) set out by the United Nations provide a framework for global sustainability goals, while ESG investing integrates these goals into investment strategies.

ESG criteria often align with specific SDGs, allowing investors to contribute to sustainable development while pursuing financial returns. By considering ESG factors, investors can support companies that contribute positively to achieving SDGs, thus promoting social and environmental progress.

Find out more about our business impact through Sustainable Development Goals (SDGs).