Doing Well by Doing Good

October 25, 2019

By Chris Gibbons, EisnerAmper Wealth Management & Corporate Benefits 

Maybe you’ve heard of environmental, social, and governance investing (ESG). If you haven’t, ESG is a popular term for “conscious capitalism” or “philanthro-capitalism,” both of which represent the idea that a person can invest for profits as well as for the greater good.

Though an ESG portfolio can be as unique as the individual who crafts it, common topics emerge in each of these broad categories:

  • Environmental: renewable energy, sustainable resource management, and carbon footprint
  • Social: corporate mission, employee wellness, and social justice and inclusion
  • Governance: institutional transparency, workforce diversity, and fair pay

Though these topics are certainly timely, they are not new in the philosophy of portfolio construction.

ESG investment portfolios were first named as such in the 1970s and now represent about one-third of every invested dollar in the world. Moreover, their performance against non-ESG benchmarks suggests investors don’t lose out on any return for their altruism.

Using the lens of FUTUREPROOFING a business, it’s clear the framework behind ESG investing is a force to be reckoned with: Shareholders are voting with their shares, employees with their skills, and consumers with their dollars. In preparing a business for the marketplace of the future, a focus on integrating and advertising environmental, social, and governance topics is an exercise worth its time.

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