ESG investments are also ones with a long-term outlook. Evans found that businesses that are capable of long-term value creation for its shareholders must excel at ESG.
“In our experience, long-term value creation is not possible for companies entangled with ESG controversies,” Evans added.
For example, the Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010 dragged British Petroleum shares prices down by 50%. The total cost to BP from fines and cleanup costs exceeded $50 billion. So ESG is a very real topic with very real economic consequences if things go wrong, Evans warned.
ESG ETF Options
Investors who believe in the positive attributes of a socially responsible ETF strategy may consider options like the Oppenheimer ESG Revenue ETF (NYSEArca: ESGL) and Oppenheimer Global ESG Revenue ETF (NYSEArca: ESGF).
ESGL targets broad U.S. large-caps through the S&P 500 but screens through Sustainalyics’ proprietary scoring system that focuses on those with positive ESG attributes and employs a revenue-weighted methodology.
ESGF, on the other hand, takes a global approach. The ETF tries to outperform the MSCI All Country World Index with strong ESG practices and re-weights companies based on revenue earned. MSCI ESG Research utilizes a proprietary ESG scoring system and screens companies based on Sharpe Ratio, a measure of risk-adjusted performance.
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