29 July 2019
ESG investing: good for the world and good for your wallet.
If you want to get a good return on your money, investing is something to think about. Do you want to contribute to a better world at the same time? ESG investments offer an attractive option.
As with most forms of investment, the best sustainable investing is done over the long term. That means when you select an investment, it’s advisable to think about what might be on the horizon. For instance, choosing for a fund that only invests in sustainable companies and sectors. Why? A company that pays its workers a fair wage, tries to limit waste and pays its taxes has a greater chance of a healthy future than a company that doesn’t. You could also see it this way: companies that have sustainable policies for environment, society and ethical management are companies with stronger assets.
What about profitability?
The stereotype that sustainable companies are less profitable is a myth. The return on sustainable investing can be equivalent to ‘traditional’ investing, as has been shown in various studies. Moreover, the ratio between potential returns and risk over the long term is more attractive than with a traditional investment, or a savings account.
Information from MSCI - the provider of business data and share indexing - shows that a selection of worldwide ESG shares performed almost as well as ‘normal’ shares over the past five years. ESG stands for the combination of Environmental, Social and Governance, so ESG investing is more inclusive than ethical investing, or green investing.
Another ESG investing return: social yields
Responsible investment offers opportunities, not only in terms of return, it also creates value on a societal and environmental level. As an investor, you are encouraging sustainable enterprises while at the same time preventing your money from being used for environmentally damaging or inhumane practices.
For its range of ethical investing solutions, ING applies exclusionary screens to bar companies involved in unsustainable practices. ING bases its selections on ESG criteria. A second screening is then done using a best-in-class approach. That means that only companies with the best ESG score, when compared to its competitors, will be included in the selection of sustainable investments. An ESG fund manager moreover defends the ESG values at general meetings of the companies in which the fund has invested.
A responsible investment strategy
In its investment strategy, ING seeks to encourage sustainable thinking in its own and other companies. ING does not invest in, for example, companies that compare poorly with other companies in the sector in terms of their corporate behaviour or are involved with products that have a negative effect on people, the environment or society.
This strategy is directed at improving society as a whole. The more popular sustainability becomes, the more companies will be forced to hold themselves to sustainability criteria.