As environmental, social, and governance (ESG) investing has evolved, so have asset allocators’ and retail investors’ demands. Those include more emphasis on social issues and risks.
That stands to reason, because many companies and investment products — including exchange traded funds — have already made admirable headway on environmental issues. Amid increasing emphasis on social issues, investors should be selective with ESG ETFs, with the Invesco ESG Nasdaq 100 ETF (QQMG) and the Invesco ESG Nasdaq Next Gen 100 ETF (QQJG) looking up to the task.
While QQJG and QQMG are not dedicated to socially-driven investors, the ETFs are credible on this front, because they eschew allocations to companies that produce products and provide services that could be deemed as societal threats. Think civilian firearms manufacturers and gambling purveyors, among others.
QQJG, QQMG Could Resonate With Socially Inclined Investors
One of the issues with social investing and related standards is the concepts aren’t as easy to quantify as sustainability and strong corporate governance. That fluidity could highlight advantages associated with broader investment products such as QQJG and QQMG.
“There are both internal factors such as how an organisation acts on diversity and inclusion and external factors including how a company interacts with the community in which it operates,” noted BNP Paribas. “How does a company ensure its value chain is free from issues such as unsustainable production methods? These dynamic risks are all perceived as more difficult to measure.”
There are compelling reasons for investors to evaluate companies’ social efforts and pledges. Here’s a great reason: Firms that do well on this front often do well by investors, while those lacking when it comes to social progress can put shareholders at risk.
“Companies doing less well than their peers face reputational risk, which could result in a financial loss for investors. Conversely, this may present an opportunity when investors are successful in actively engaging with companies to urge them to make positive changes,” added BNP Paribas.
QQJG and QQMG are relevant for another reason: Both ETFs adhere to the United Nations Global Compact principles, which have clear implications on the social investing front.
“The UN Global Compact states that efforts to achieve social sustainability may give companies the potential to discover sources of innovation. These can help them develop new products and services, creating the ability to break into new markets, attract new business partners and allow them to reduce any conflict they have with the community,” concluded BNP Paribas.
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