Carole Crist had the great pleasure of speaking at #BattleFin’s two-day “Alternative Data and Digital Asset” event last week and she also had the opportunity to moderate the ESG (Environmental, Social, and Governance) panel discussing trends and data insights for 2022.
ESG Trends: Environmental, Social and Governance BattleFin Panel Moderated By Carole Crist
The ESG panel that took place in Miami courtesy of BattleFin focused on helping investors to understand the ESG landscape, but it also touched on issues around ESG scoring and greenwashing, the impact of ESG, and the evaluation of companies that fulfill ESG principles.
What is ESG?
ESG stands for “Environmental, Social, and Governance” and refers to a style of investing. ESG is often used interchangeably with “socially responsible investing or “sustainable” investing.
Investors use ESG criteria to screen potential investment opportunities.
Environmental criteria refers to how environmentally responsible a company is.
Social criteria refers to how a business manages relationships with suppliers, communities, customers, and employees in their immediate area.
Governance refers to how a company manages executive pay, leadership, internal controls, audits, and shareholder rights.
Through the evaluation of environmental, social, and governance criteria, investors determine how investible a business is. ESG criteria can also divert investors from making investments in companies that are riskier investment opportunities.
How Do Investors Assess ESG Criteria?
When assessing environmental criteria, investors may look at how companies are managing environmental criteria like energy use, natural resource conservation, and the treatment of wildlife. Assessing these factors before making an investment isn’t just about assessing risks that already exist, it’s also about assessing risks that have the potential to exist in the future. These possible future risks may cost investors a fortune if the necessary research is not done beforehand.
When assessing social criteria, investors may look at business relationships between the company they will be investing in and other businesses. For example, if the company participates in local charity efforts or takes part in community rebuilding efforts? Are current employees at the business working in fair conditions and are all of the necessary health and safety regulations being met? Are employees held in high regard by management?
When assessing governance, investors may look at how accurately a company’s records are and whether the stockholders of the company are permitted to vote on company issues.
When assessing ESG criteria, it is highly likely that a company may have a few questionable areas in one or more category, but the point of assessing ESG is to look at all three of the points as a whole and not as independent factors. All in all, the aim is to look at the company and determine whether it is a good investment opportunity or an opportunity that should be passed up in lieu of better opportunities that carry less risk or more reward.
Want to Learn More About ESG Investing?
If you are interested in learning more about ESG Trends and ESG investing, Carole Crist can help to point you in the right direction, she can even set you up with some great investment opportunities through her circle of connections!