ESG Is Having a Record Year, Despite Its Haters
According to research from Fitch Ratings, ESG investment rose 15% to $52 billion in the first quarter of this year, which is quite a jump from 2018, were growth stayed steady at 1% for the entire year. ESGee? ESG stands for environmental, social and corporate governance. You can read more about it here, but it is basically a form of socially responsible investing that uses a company’s values and accountability to assess risk. How does a company treat the environment, or its employees? What is the corporate culture like? If a company is, say, adding to climate change or has issues with gender pay disparity, it might not have a strong “ESG” framework and thus you wouldn’t invest in it. Why Now? So why is ESG all the rage these days? Some analysts credit it to a Trump Bump, especially President Donald Trump’s withdrawing the U.S. from the Paris Accord, and a general growing concern about the effects of climate change. Take It ESG Socially responsible investing is a $12-trillion industry right now, but not everyone is ESG or bust. Some critics think it’s a fad that won’t bring long term value for investors. Others think it’s simply not defined coherently and consistently. Which is why you might find McDonalds in an ESG fund -- the company’s efforts to be more green fall in line with “E” but its stance on minimum wage and workers rights are decidedly not “S.” But for now ESG is clearly in demand -- look for the trend to grow this year. -Michael Tedder Alkis Konstantinidis / REUTERS