Environmental, Social & Governance (ESG) Awareness
In recent years there has been an increased awareness regarding public companies and their ESG track record. In my own work, I have also been witness to this trend. I often hear CEOs and research partners weighing in on enhancing their corporate culture as it relates to issues of governance, society and sustainability. Moreover, there is a growing movement of “smart money” investing in companies that have a strong history of these pertinent issues and I see this as something that adds value for shareholders. Over the years, I have included ESG components in my company’s research process to avoid investing in companies that have flagrantly poor environmental, social and governance track records.
Investing in companies that cultivate ESG best practices just makes good investing sense. In the “old days” one might argue that to invest with a social conscious might mitigate performance – but today that is just not so. There are an increasing number of large institutional investors who appreciate companies with high ESG marks and their hefty investment dollars can go a long way in supporting both higher stock prices and industry standards.
For many, investing with a social conscious is a challenge since most mutual funds – especially the index funds – invest in a wide array of companies without regard or ability to be ESG sensitive. This invariably exposes investors to companies that may have egregious violations, which hurts these index shareholders in the long run.
ESG investing means different things to different people. Searching for companies with certain characteristics that show the promise of accelerated growth – with a bias towards those with positive governance, environmental and social awareness, is how I look at it. However, you may feel that you would like your portfolio to be more sensitive to specific ESG constraints. Do what works for you.
The Sustainable Endowment was written for executives and board members of small- to mid-size U.S.-based nonprofits, charities, or foundations. Running a nonprofit requires specialized knowledge and skills, especially regarding foundation management and investing your endowment so it remains sustainable for years to come.
This book walks you through the basics and best practices of what you need to know to be successful.