Types of ESG Investors

ESG stands for Environmental, social and governance.

In recent years, ESG criteria are of increasing interest to companies, their investors and other stakeholders. These standards are the central factors that measure the ethical impact and sustainability of investment in a company. With increasing awareness of global warming, carbon emission and sustainability; concerns about the ethical status of quoted companies also follow.

ESG investing is an investment strategy where the investor considers the environmental, social and governance factors of a company prior to investing.

As with any investment types, investors should do their own research for each investment product they are considering.

(picture credit: Visual Capitalist


Types of ESG Investors

Broadly speaking, there are four main approaches to ESG investing: ESG integration, exclusionary investing, inclusionary investing, and impact investing.

1. ESG Integration

“I want to integrate ESG factors and traditional factors to assess the risk/reward profile of my investment.”

For example, using an ESG integration approach, a company’s water usage and toxic emissions would be assessed against financial factors to analyze any future risks or investment opportunities.

2. Exclusionary Investing

“I want to screen out controversial companies or sectors that do not meet my sustainability criteria.”

Using an exclusionary investing approach, an investor may screen out companies whose revenues are from tobacco, gambling, or fossil fuels.

To read more, click here

Share on facebook
Share on twitter
Share on linkedin