Changing the world is never an easy task. In fact, some people will tell you that it’s an impossible one. Yet, even if that is the case, we have to try our best to leave a better world for generations to come. But the question is, where to start?
Well, holding businesses and corporations accountable for the way they operate, their environmental practices, and social activism may be a good starting point. After all, companies have a long-term impact on society and the environment that is by no means small. And the most effective way to get them to reexamine their organization and operational strategies is by turning to ESG investing.
What Is ESG Investing?
At first glance, ESG investing may seem like one of those complicated economy-related terms that you need a university degree to understand. But in reality, it’s not like that — ESG stands for Environmental, Social, and Governance. It’s a new kind of investing that puts emphasis on a company’s long-term impact on the environment and social activism. In other words, it’s sustainable, conscious investing that refuses to support businesses that don’t care about our future.
Gone are the days when companies could only show interest in making a profit and still get investors’ support. As we saw in 2020, change is underway — environmental issues are coming to the forefront, and societal injustices are no longer tolerated. People are reexamining their own beliefs and habits, questioning the businesses they’ve supported so far. Have they done anything for the world other than providing products or services? If the answer is no, they need to do better.
And in the era of the internet, no business can escape this scrutiny. ESG investors can easily do a background check and see how environmentally friendly or socially conscious a company is. Then, depending on the results, they decide whether they want to put their money into it or not.
How ESG Investing Is Helping the World
Now, obviously, ESG investing promotes holding companies to a higher standard and responsible business operations. But let’s take a closer look at how exactly this new movement advocates for change on a global level. Here are a few things ESG investing does:
Promotes Environmentally Friendly Practices
Climate change is no longer just something that might happen in the future. It’s here right now, unfolding before our very own eyes. Hurricanes, floods, extreme temperatures, fires — these things are more common now than they’ve ever been before. And whoever says that we have no influence over the changing climate is deliberately keeping their eyes shut.
Luckily, many people recognized the disaster that’s looming above our heads. Their joint efforts to prevent it brought about the first ecological movements and sustainable practices. The ideas and strategies are there; the only issue now is their spread and implementation.
And ESG investing may be the perfect solution. Many company owners and CEOs may not care much about sustainable practices and protecting the planet. However, they certainly do care about making a profit. And if their investors start backing out because of their disregard for the environment, these CEOs are sure to change their tune.
So, make sure to support companies that already implement sustainable practices in their operations. You can check the private equity esg report. Look into their energy sources, waste management, recycling options, and building solutions. If it’s a financial institution, check if it’s a green bank that doesn’t fund fossil fuels. If they show a clear tendency towards conservation and environmental protection, they are an excellent choice for investing.
Supports Social Equality and Human Rights
Looking back on the last few years and the numerous social movements they gave us, it may seem that our society has never been less equal. But that’s not the case — it’s just that the marginalized groups finally found their voices. Now they don’t just demand to be heard; they also ask others to help support their cause.
And ESG investing plays a huge part in that. Investors no longer want to give their support to just any company. For a business to be worthy of investment, it needs to show that it cares about pressing social issues. After all, large businesses don’t exist separately from society, and their customers’ concerns should be theirs too.
But it’s no longer enough to just post words of encouragement on social media or follow the latest trends. The support has to go deeper than that. If a company wants to be taken seriously as an ally, it needs to approach the subject seriously too. It has to lend its voice to those who don’t have it and actively strive towards making the workplace more inclusive and diverse.
After all, fake activism is usually easy to spot. And ESG investors are particularly skilled at noticing it.
Ensures the Companies Are Run Ethically
Many businesses, especially large ones, are no strangers to discrimination and lack of transparency. Those at the top often enjoy numerous privileges that regular workers can only dream of. Salaries and wages at different levels often have unwarranted discrepancies. Add to that racial and gender discrimination, and it’s clear that there are many issues to address.
And ESG investors want them addressed as quickly as possible. They don’t want to put their money into a company that mistreats their employees, pays unfair wages, and discriminates against certain groups of people. And who can blame them?
Now, companies have an additional incentive to reexamine their own work practices and improve what’s lacking. If this sort of pressure by both investors and consumers continues, we might even be able to effect some real change!
The Future of ESG Investing
So, what can we expect from ESG investing? Is it just the latest trend, or is it here to stay? Well, if you ask us, the era of ESG investments is just getting started. As people grow increasingly environmentally and socially conscious, their standards will become tougher to meet. Still, their demands for change will be just as loud, if not louder.
But all that is a good thing. After all, change is clearly necessary at all levels of our society. And large corporations, more than anything else, have an incredible impact on the world we live in. So if they start operating in a more environmentally and socially conscious way, perhaps our world will too.