Related: Dipping Your Toe into the ESG ETF Waters
With these socially responsible parameters, companies may be taking on a long-term business model. In an attempt to head off any environmental and social problems that their operations may create, companies are able to obviate potential regulations and diminish political risks ahead. Moreover, this proactive approach may diminish the risk of conflict with non-government organizations and other advocacy groups that can affect sales and brand recognition.
“Demand for such investment products has grown as clients increasingly seek to integrate ESG criteria into their investment processes,” according to MSCI. “MSCI continues to lead the natural evolution in this field by combining the attributes of both Factors and ESG to bring next generation products to market. These products are designed to allow clients to more effectively incorporate ESG integration into Factor focused portfolios.”
For more information on the ESG theme, visit our socially responsible ETFs category.