You may have heard about “sustainable investing.” But if you’re not familiar with it, you may have some questions: What does it involve? Is it right for me? Can I follow a sustainable investing strategy and still get the portfolio performance I need to reach my goals?
Sustainable investing can be defined in different ways, with different terminologies. However, one way to look at a sustainable approach is by thinking of it as investing in a socially conscious way which may involve two broad categories: environmental, social and governance (ESG) investing and values- based investing. As its name suggests, ESG investing incorporates a broad range of environmental, social and governance risks and opportunities, along with traditional financial measures, when making investment decisions. This approach may have a neutral impact on performance because it maintains a focus on managing risk, traditional fundamental analysis and diversification. Here’s a quick look at the ESG elements:
• Environmental – Companies may work to reduce carbon emissions, invest in renewable energy, decrease pollution and conserve water resources.
