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ESG principles can clearly help with attracting investors

Funds that apply ESG (environmental, social and governance) principles captured $51.1 billion of net new money from investors in 2020, according to Morningstar, more than doubling the prior year’s take. This growth is driven by consistent findings that ESG investing does not compromise financial returns, and quite often outperforms.

According to this recent article in Crunchbase News, traditional ESG investing incorporates a social, environmental and governance lens to minimize risk and maximize financial value over the long term. Other investment strategies that can carry the label of ESG investing include “values-based-investing,” where investors screen from their portfolios companies that don’t align with certain social or environmental values (e.g., no tobacco companies), or “impact investing,” where investments are made explicitly to promote positive social and environmental outcomes, such as increasing racial equity or decarbonizing the global economy.

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