Environmental, Social, and Governance (ESG) investment has become a buzzword in the world of finance, with investors trying to tap into long-term sustainable returns through investments that align with their values. ESG investing allows investors to put their money where their mouth is, scrutinizing the environmental and social impacts of the companies they choose to invest in.
According to Morningstar, assets in ESG-focused funds reached $1.65 trillion by the end of 2020, up from $1.1 trillion in 2019. This growth has been propelled by the increasing interest of investors, particularly millennials and women, who tend to be more socially and environmentally conscious.
Investors choosing ESG funds enjoy the dual benefit of making investment decisions compatible with their personal values while earning long-term sustainable returns. These funds help investors to invest in companies that meet certain environmental, social, and governance criteria, which can contribute to their overall positive impact on the world.
ESG funds often look to invest in companies that prioritize sustainability by managing their environmental impacts, having a diverse and inclusive workforce, and maintaining high ethical standards. For example, Tesla has been a hot pick for ESG investors because of its commitment to producing clean energy vehicles and reducing carbon emissions.
According to recent data from Fidelity, around 65% of high-net-worth millennials are interested in investing in ESG mutual funds, and 80% believe that ESG criteria will become an important factor in their investment decisions. Furthermore, institutional investors are also showing increasing interest in ESG investments, with pension funds and endowments incorporating ESG principles into their investment strategies.
The shift towards ESG investing isn’t just driven by the financial benefits. As investors become more aware of the transformative power of their investment choices, they are willing to put their money into companies that are making positive contributions to society and the environment. With ESG funds offering a diverse range of investment opportunities across different sectors such as renewable energy, healthcare, and technology, investors can make a difference while earning impressive returns.
In conclusion, the increasing interest in ESG funds has been driven by investors wanting to align their investments with their values while earning solid returns. As investors become more socially and environmentally conscious, ESG funds offer an excellent opportunity to put their money to good use while having a positive impact on the world. With ESG investing poised for continued growth, it’s an exciting time for investors looking to diversify their portfolio with investments that can make a positive difference.