As the planet reacts to human activity and people around the world experience dramatic climate events, ESG, or environmental, social, and governance, is attracting a lot of attention from concerned investors and boards. Here, Nate Williams gives a useful overview of ESG investing and the best ESG funds currently open to investors.
It’s interesting: Decades ago, it would have been unheard of for a company to make their sociopolitical opinions publicly known. Now, the opposite is true: It’s rare for a company not to speak out against injustices of all sorts. With more and more companies realising their role in environmental, social, economic, racial, and privacy issues, it’s only natural that this heightened awareness would translate directly into the way we now invest. It’s called ESG investing, and it’s quite the hot topic as of late.
ESG investing explained
ESG stands for environmental, social, and governance — three aspects of our world that dominate much of the conversation surrounding what is ethical and what is not. Investors no longer want to put money into “dirty” — a.k.a. environmentally, socially, or politically shady — companies. They want to use their money to elicit positive change and hopefully see a nice return on that investment, as well.
ESG investing and the best ESG funds
ESG investing depends on independent ratings that examine how a company has affected the environment, our society, and our governance on both a national and global level. These ratings come from third parties, independent companies, and research groups alike. The higher a company’s rating, the more environmentally, socially, and societally conscious they are. An ESG fund combines tens, hundreds, potentially even thousands of stocks that fit this bill, allowing investors to put their money into a whole array of companies attempting to bring forth some positive change.
The 10 best ESG funds right now