What is ESG in the pensions & investment world?01 July 2019
You may not have heard of ESG before, but it is increasingly important in the processes that people may apply to the way they invest.
ESG stands for Environmental, Social and Governance and these are the central factors of measurement for the sustainability and ethical impact and behaviour of a business/company. Now, you will probably be aware that the financial services industry is not averse to an acronym or two, indeed we tend to have far too many. But this one, ESG, may offer a real difference. ESG measurements are designed to help better determine the future financial performance of companies. You could argue that this is just good corporate social responsibility, but it is also the need to think long-term.
I think it is also important not to mix ESG with ethical investing. Both add additional parameters to investing to ensure that money invested meets an agreed standard or target, but the two focus on different factors. A good article / webpage on ESG investing can be found at Aviva's website (not an endorsement) here: https://www.avivainvestors.com/en-gb/about/responsible-investment/our-approach/esg-alternative-assets/
Having hosted a Chartered Institute for Securities and Investment (CISI) event in the spring of 2019 in Reigate, I was impressed with Aviva's approach to this growing topic and their enthusiasm for its importance. If you are interested in ESG investing, then you may be pleased to know that there are now metrics that have been introduced to help focus on this opportunity. More can be found here: https://www.msci.com/esg-ratings
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Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner
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