November 2016

Posted by Anton Murray Consulting on . Posted in 2016

Ethical & Socially Responsible Investing

ESG, or Environmental, Social and Corporate Governance, seems to be in financial services news a lot lately. All the big banks and funds appear to have a stronger-than-ever ESG focus, especially with climate change, sustainability and human rights in the spotlight in recent years. These ESG factors are having a significant impact on a company’s value, and this way of investing is becoming more mainstream.

As outlined in a recent article in The Australian by Will Hamilton of Hamilton Wealth Management, ethical and socially responsible investing has traditionally meant excluding tobacco, alcohol, gambling and guns from investment decisions. But increasingly these exclusions are moving towards environmentally-conscious choices such as excluding investment in fossil fuels like coal, despite its rising price.

Last December the Stock Exchange of Hong Kong upped the ante for listed companies, advising them they have to ‘comply or explain‘, including 12 environmental KPIs including greenhouse gas emissions, hazardous wastes, water consumption and energy use.

The story is the same in Singapore. An annual review of Singaporean companies’ sustainability will take place, requiring companies to report on ESG issues relevant to their business.

The argument behind more responsible investing is that this will help create a more sustainable economy, in a world where this is more important to investors, and more small-scale customers, than ever. And the icing on the sustainable cake? ESG funds have been seen to outperform non-ESG funds in some markets.

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