Sustainable Investing, Environmental, Social, and Governance (ESG) and Sustainable Development Goals (SDGs) have become buzzwords in the investment industry. But what do they mean and how do they impact investing?

ESG

• ESG criteria are a set of standards used to evaluate a company’s environmental, social, and governance performance.
• Environmental factors include a company’s carbon emissions, water usage, and waste management practices.
• Social factors include a company’s labor practices, human rights record, and diversity and inclusion policies.
• Governance factors include a company’s board structure, executive compensation, and anti-corruption policies.

SDG

• SDGs are a set of 17 goals adopted by the United Nations in 2015.
• The goals cover a broad range of issues, including poverty, hunger, health, education, gender equality, and climate change.
• Investors can use SDGs to identify companies that are aligned with their values and to track progress on sustainable development.

The Reality of Sustainable Investing

While ESG and SDG investing are gaining popularity, there is still a gap between expectations and reality. Many companies are still in the early stages of ESG reporting and there is a lack of standardisation. This can make it difficult for investors to compare companies and to assess their ESG performance.

Additionally, there is concern that some companies are greenwashing their practices to attract investors. Companies with strong ESG performance tend to be more resilient and sustainable in the long term, which can enhance investment returns. By considering ESG factors, we can align your investments with your values and contribute to a more sustainable future.

Conclusion

ESG and SDG investing offer the potential to create a more sustainable future. However, investors need to be aware of the challenges and limitations of sustainable investing. By doing their research and working with reputable investment advisors, investors can make informed decisions about ESG and SDG investments.

The ideal scenario would be of course that top performing investments would meet all ESG and SDG requirements, the reality is however that while standards are improving, it is still virtually impossible to attain 100% across any investment portfolio.

As part of our advice process here at Harrison Brook, we will assess your unique situation and requirements to find a bespoke solution, finding the right balance between your investment and conscience goals.