Many green investments fall into the category of “ESG” which stands for “environmental, social, governance” and factors in these three key areas in addition to the usual financials when evaluating potential stocks for your portfolio. As consumers become growingly aware of the “hidden” harmful impacts behind products they regularly use this sector is vital and growing. According to a 2019 Global Impact Investing Network report the impact-investing sector doubled in size the last two years, additionally, the same report found that impact investors say they would continue to invest in these areas.
Investment strategies related to ESG
- Socially Responsible Investing (SRI)
- Impact investing
All involve making your portfolio reflect your best vision for our future. Always be thinking ahead. Be optimistic. Think about the world that you want to create, because sure enough your dollars and mine, our capital, is helping shape the world.” David Gardner, co-founder, The Motley Fool
There are many studies that prove a positive performance of companies focused on areas related to ESG. One such study, out of Harvard Business School, found that stocks of companies with the strongest performance on ESG issues outpaced those with poor ESG performance.
As industry leaders slowly start to make the transition it’s becoming increasingly apparent what’s good for the planet and people can be great on profits as well. As an investor you can take part in the fruits financially while improving the environment now and for future generations.
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