This week we covered, Environmental, Social and Governance (ESG) investing, not focusing exclusively on how it can change the world for the better, but how to use the framework to enhance portfolio returns. We identified three primary ways this can be done.
- The use of engagement and active ownership from shareholders to influence corporate behaviour;
- An integration of ESG factors into individual stock valuation and financial analysis; and
- Assessing behavioural biases and benefits.
As the world continues to embrace ESG investing it is proving to be profitable for investors who incorporate it into their investment process. It is also becoming increasingly important for companies to enhance their environmental and social standards while improving corporate governance, not only to attract investor capital but, also increase the lifespan and resilience of their business model. Do not forget that ESG investing can not only enhance your portfolio performance, as the self-fulfilling prophecy raises demand by all stakeholders, but it changes the world for the better.