In today’s socially responsible world the impact of ESG is becoming more important; in fact its role in investment strategy cannot be over-emphasised. Over the past few years there has been a marked and growing dominance of the role of ESG as a key theme for investors, and that trend is only set to expand.
Growing calls for transparency and global crises – such as climate change – mean that the theme is already forcing a number of companies to change both their strategy and behaviour. For some companies the increased scrutiny into the way in which they conduct themselves is having an impact on every aspect of their operations.
As a result it’s highly likely that there will be significant shifts in the allocation of investment capital away from so called dirty industries (oil, power or gas) and companies with poor social and governance policies. The next decade should see ESG become embedded into the fabric of government and corporate behaviour.
Consequently, it makes good sense to consider investing in companies which embrace the concept of ESG. Early research has even started to show the link between good ESG practice and company performance.
For a more detailed overview of this topic, or other investment themes, please visit our Investment Library.
We always encourage investors to ensure their financial planning investment strategy is aligned with the risk they can tolerate.
To discuss any aspect of your own financial planning please contact your nearest office.
Julian Broom, Chief Investment Officer