There is evidence across many time periods and regions (especially in emerging markets) that integrating ESG into the investment process, and investing in companies with better ESG scores, can add to performance.
Q4 2021, Issue 9 — The Official Quarterly Magazine of ESG Ireland. The latest issue features a broad range of articles, from the challenges facing the EU’s action plan to a sustainability driven start-up focused on delivering seaweed inspired food.
There are several considerations investors can take into account to better align their portfolios with the transition to a net zero economy, and it may take a combination of the below approaches to build an entire portfolio that is progressing toward a net zero-aligned pathway.
As an investor, your money is out there in the world, supporting different companies. There will be those that manage environmental, social and governance (ESG) risks well, and others that don’t. But investing your money gives you the power to engage with companies on their ESG performance. After all, incorporating ESG considerations into your investment decisions isn’t just for the feel-good factor, it’s good financial sense.
Our understanding of the likely impacts of climate change means it is imperative for us to consider how it might affect portfolio performance. This creates significant potential for long-term investors to focus strategically on shifting allocations to investment themes and sectors that are particularly strong at mitigating climate risk or exploiting new climate-related opportunities.
Europe is seldom considered the most exciting place to invest. This is mainly because European index returns – a proxy for average market returns – have been modest over most time frames. But Europe offers some excellent investment opportunities for active investors willing to seek out its treasures.