With awareness about the impact of human behaviour on the environment growing, the role a corporation plays in society and how it conducts its business have come under the scanner. Conscientious investors want to invest in companies that will help sustain the environment rather than harm it.
From an investor's perspective, an investment choice is a subjective and personal decision driven by individual preferences. The world faces myriad challenges today, including climate change, social/economic inequality, uncertainty and volatility in the global economy. Broadly speaking, considering these challenges and the need for accurate information devoid of any misrepresentation, it is a good idea for investors to become more aware about the various avenues available for responsible investment.
When investors are better informed about their ESG-based investment portfolio, it will improve the quality of their decisions. It is therefore important for them to look beyond labels and assess the investment philosophy and portfolio construction of ESG funds. They should also look at disclosure standards to assess if they feel comfortable with the information disclosed by the ESG fund, and see if it aligns with what they want to achieve.
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