ESG - the three letters of the future. How do I profit from it sustainably?
The topic of ESG and sustainability is becoming increasingly important in the world of finance. But what is actually behind the three capital letters?
The idea of ESG is to evaluate the sustainability of a company on the basis of three core factors. The resulting metrics help to weigh the opportunities and risks of an investment when making an investment decision. The following three criteria are evaluated:
The E is used to find out how sustainable a company is for the environment. It is about the plants, the animals, the climate and much more.
The environmental sustainability of a company also plays an important role for the return on investment. For example, if a company relies on fossil fuels, it may have to fundamentally retool or pay environmental taxes in a few years due to changes in the law. The resulting costs can be expensive for investors. On the other hand, particularly sustainable companies benefit from a good reputation, modern technology and possibly subsidies.
At S, the focus is on people. These are primarily the employees, but also other groups of people.
People are often the most important resource for a company. They form the image of the company in the eyes of its customers. And all customers have something in common; they are people too. The professionalism of an employee, the recommendation of another customer, the conscious choice of suppliers - all these contribute to a healthy company in the long term. And only healthy companies generate a corresponding profit.
The G focuses on the way a company is managed.
In order to survive successfully in the future, a company must demonstrate a certain order and transparency. Clear instructions, a comprehensible distribution of competencies and useful reference books prove to be real disaster-preventers in everyday work. A company must constantly question itself in these aspects over time, only then will it not leave valuable profits lying around or even drown in chaos.
If all three criteria are fulfilled well, the chances of long-term corporate success are considerably higher. For the investors this means more profits, for the employees a more secure job and for the world as a whole a big plus.
Would you like to profit from sustainable investments yourself? On the GGX website we provide clarity with valuable articles, our GGX Finder and the independent GGX ESG Rating.
About the author
Mauro Baumann is an apprentice at St.Galler Kantonalbank and completed an internship at Global Green Xchange as part of the KV4.0 practical year. He became interested in the world of investments early on with an interest that will probably never be exhausted.