Sustainable investing approaches or often referred to as ESG are investment strategies and products that have grown rapidly around the world in recent years.
ESG investment itself also has a long history like investment in general. Initially, this type of investment only considered the free aspect. One of them is avoiding investing in tobacco companies.
Next, within 10 to 15 years it has developed in adopting various sustainable aspects and giving birth to capital market innovations. Certainly the same as other types of investment, which provide benefits and even losses.
It’s also an investment, there is definitely a risk for investors who carry out the investment. This article will explain the details regarding sustainable investment.
Get to know Sustainable Investing Approaches
The Sustainable Investment Approach is basically an investment made by considering several aspects. These include environmental, social and corporate governance aspects, of course, in addition to financial factors.
Therefore, nowadays ESG investment, especially in the context of the capital market. This many know him as ESG investment.
While factors related to the environment E namely, management of carbon emotions, energy conservation, waste management, pollution, and many more.
For the S factor itself, for example encouraging gender equality, community empowerment and vision, and others. Meanwhile, from the G factor, the company can be assessed from the independence of the board of commissioners and directors.
Impact of portfolio is looking at the way investment portfolios have an impact. One of which is the negative impact on the environment and society. This sustainable investment originally used this perspective and most of the people, regulators, and auto NGOs saw it from this perspective. This has a role so that investment and business do not harm people and do not damage the environment.
Understand the Investing Approaches category
Broadly speaking, Investing Approaches itself has two broad categories, the first is a responsible investment, an investment that avoids negative environmental and social impacts.
Second, investment also aims to have a positive impact on the environment and social. This category also carries several strategies, the first of which is an exclusive strategy or as a negative screening, which is quite simple, and was first used by investors.
However, it is still quite dominant until now. This one strategy filters out companies or investment objects that have a negative impact on the environment and even socially.
Businesses that are considere negatively environmentally and socially generally, cigarettes, coal and weapons of mass destruction, gambling, and others.
Now you already know about the general review of Sustainable investing approaches. Now all you have to do is run the investment properly.