27 May The investment logic for sustainability
What if it was possible to generate strong investment returns, but also do so with a social conscience and environmentalist mindset?
According to Chris McKnett, this can absolutely be done and his compelling Ted Talk here outlines his reasons for thinking so. He talks about ESG – a type of investing which seeks investment growth whilst being considerate of the impact upon the physical environment, society and governance of businesses.
What’s encouraging about Chris’s Ted Talk is that he doesn’t paint a picture of ESG “dampening” returns, as many people claim. Indeed, he points out that ESG is moving more to the front-and-centre of how CEOs, shareholders and other stakeholders approach investing.
Moreover, ESG can actually beat other companies when it comes to investment performance. This makes sense when you think about it. A company’s workforce is more likely to remain loyal, hardworking and innovative if their labour rights are strong. Damaging, costly PR disasters are less likely when a business is careful to promote board diversity, minimise its carbon footprint and ensure its activities are not harming local communities.
Are companies increasingly using ESG and, indeed, could this be “the future” of investing as a whole as the costs of ignoring it intensify? Chris certainly seems to think so, and his thoughts are certainly worth ten minutes of your time!