Exploring ESG Investing

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What is ESG Investing?

ESG stands for Environmental, Social, Governance. These are three factors that investors consider when measuring the sustainability or impact of an investment into a business or company. It is a form of SRI or Socially Responsible Investing, that seeks to improve the quality of life as well as deliver capital gains. “Many corporate managers still equate sustainable investing with its predecessor, socially responsible investing (SRI), and believe that adhering to its principles entails sacrificing some financial return in order to make the world a better place. That view is outdated.” (https://hbr.org/2019/05/the-investor-revolution)

Environmental

This criteria focuses on how a company’s practices directly affect or relate to our environment. Climate change is one of the biggest threats our planet faces. Our planet is warming and human activities are at the very least, partly responsible for it. Carbon emissions are one of the leading causes of global warming and climate change. As local and federal governments continue to address climate change, new opportunities for renewable energy are coming to light through incentives and tax credits. According to energysage, 12 states and territories in the U.S. have committed to 100% clean energy by or sooner than 2050. Investing in renewable energy is a good example of ESG investing because it improves the health of our planet and also provides monetary gains. 

At Breiter Planet Properties we are working to bring solar access to all. The more solar energy generation we have, the less we have to rely on the ever-polluting coal fired power plants for our electricity.

“Pollution from coal-fired power plants account for 81 percent of the electric power industry’s greenhouse gas emissions, including carbon dioxide. These plants also release smaller amounts of methane and nitrogen oxides.” (ToxTown)

Coal fired power plants can also cause health issues for people who live near them or work at them. Investing in solar supports a healthy environment for all living things, while also providing solid returns. Schedule a call with us to learn more:

Social 

This criteria focuses on how companies treat their employees. It is common knowledge that employees who are happy, healthy and have good relationships with their bosses and co-workers will perform better. Safety, diversity, and charitable works are also included in the social criteria of ESG. Closing the gender gap is a goal for the Social aspect of ESG. It has been reported that women earn 78 cents for every dollar that men earn. Companies that focus on closing this gap would fit in the social criteria for ESG.

Governance

This criteria focuses on how companies are governed. It focuses on board diversity, whether or not the company deals in corrupt lobbying or bribery tactics, and overall tax strategy. One of the main focuses of the Governance criteria is CEO compensation. In the Great Recession of 2007-2009, while many Americans were suffering, CEOs received massive payouts. Executives who dial back their compensation to reasonable levels reflect ethically sound governance. 

ESG Works

ESG is not just a dream or some pie in the sky idea. It works. “In 2018, Bank of America Merrill Lynch found that firms with a better ESG record than their peers produced higher three-year returns, were more likely to become high-quality stocks, were less likely to have large price declines, and were less likely to go bankrupt.” (Harvard Business Review)

“Our wealthiest clients want to know their investments are making a difference to make the world a better place,” noted Rina Kupferschmid-Rojas, head of sustainable finance at UBS Group, which has the largest wealth-management business in the world, at $2.4 trillion.” (Harvard Business Review)

Investing in solar projects is a great example of ESG investing. Investing in Breiter Planet Properties will improve environmental conditions through the development of solar projects around the world. Check out Breiter Planet Capital for more information. 

Sources:

https://www.investopedia.com/articles/investing/030316/3-trends-watch-esg-investing.asp

https://news.energysage.com/states-with-100-renewable-targets/

https://hbr.org/2019/05/the-investor-revolution