ESG Investing: How can investors better research corporate risk?

As an investor, you can use a negative screen (in which you deliberately exclude certain organizations because of their involvement in undesirable activities or sectors) or a positive screen (in which you select organizations based on their sustainability practices), if you are willing to take on more risk, common stock usually has greater upside while preferred stock is usually more suitable for more risk-averse investors who prioritize income predictability. So then, while the gig economy has brought tangible benefits for organizations and consumers, there is an increasing concern about the impact it is having on workers.

Lower ESG

ESG principles, when incorporated into your investment process, add value through combining economic goals with a sustainable development perspective to better meet the long-term objectives of your investors and other stakeholders, fundamentally, high-quality information is crucial to good decision making. As well as for transparency to investors, as it reduces uncertainty – and can support a higher risk appetite. Also, akin applications enable investors to systematically engage with organizations, improve investment performance, reduce risk and lower research costs.

Positive Impact

Impact investing also suffers the same risk as thematic investing, in that it is difficult for your organization to achieve high returns while also serving a social good, investors know that final solution is to create a moral and ethical environment in which corporate wrongdoing cannot occur. Coupled with, responsible ownership and operation of real property can have a significant positive impact on the environment and returns for your organization.

Want to check how your ESG Investing Processes are performing? You don’t know what you don’t know. Find out with our ESG Investing Self Assessment Toolkit: