3 Things You Need to Know About ESG Investing

By Liz Miller via Iris.xyz

Over the past twenty years, there has been a slow but steady trend emerging among financial services:

An ESG investing approach where investors seek long-term competitive returns while simultaneously creating positive societal impact.

Being a “socially responsible” investor in previous years meant avoiding investments in companies whose products or services were “unethical.” This includes companies that produced alcohol or tobacco, advocated gambling, manufactured weapons or burned fossil fuels and harmed the environment. Continuing with this trend, investment managers now proactively screen for a wide range of ESG factors for potential long-term advantages. According to a new survey by BNP Paribas, nearly 80 percent of institutional investors incorporate ESG factors into their decision-making. Therefore, “socially responsible” investors increasingly seek opportunities that contribute positively to society to generate sustainable and financial value.

This approach also received a major vote of confidence in October 2015. The Department of Labor issued a bulletin that allowed private sector employers to add ESG fund options to retirement plans.

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