ESG Investment – no longer a trend but a tenet
There was a time when “ethical” investment was its own niche. Ethical investment was plastered all over investment products and people who thought ethical investment reflected their beliefs, morals and personalities bought into products that were not really intelligent, profitable or ethical! That seems a very long time ago.
The next stage in the development of investment with accountability were funds that truly were ethical and, to everyone´s surprise, they were also profitable. Some of the most successful ethical funds, ISAs and bonds outperformed their immoral rivals. I suspect that the reason for this was that the due diligence necessary to ensure ethical compliance meant that the idle analysts did their jobs properly by default. But then I am a cynic.
A digital world connecting our global village now means that the analysis of a business in terms of what it does, how it does it, and how it impacts its staff, clients, suppliers and the rest of humanity is no longer an option but a necessity.
ESG: Environmental, Social, and Corporate Governance refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. And if the business you are considering investing in doesn´t have a cohesive ESG strategy then leave well alone. Because these criteria help to better determine the future financial performance of companies.
Some of that may be because, as I previously suggested, any business that hasn´t thought through this aspect of its mission isn´t competent or credible elsewhere. Some of it is because the digital and ethical consumer acts fast and aggressively – witness a 50% collapse in Boohoo´s value based on a sweatshop manufacturing expose by a newspaper. 50%!!!!!
Businesses are forced to reflect the interests, likes and dislikes of their customer. And the biggest percentage of active buyers is now Gen X’ers, Millennials and Gen Z’ers – who all have a more focused perspective on the morality and consequence of business, finance and acquisition than earlier generations.
Investment Owl has always researched the ESG aspects of the businesses that we raise money for and we continue to believe that this is crucial to our analysis. But it´s no longer just about making sure that the investments aren´t doing bad stuff. Increasingly, we want the businesses, ideas and opportunities that we promote to have a positive impact on the world and humankind. That is why medical cannabis, biofuels, MedTech, EdTech and inclusive FinTech are the investments that we are seeing attract investment and exceed expectation at the moment. Take a look here: https://investmentowl.com/investments/
And get in touch if you would like to find out more about how you can grow your wealth and impact humankind positively and permanently.