Environmental, social, and governance (ESG) investing is a hot trend among millennials and GenZ. It is a strategy to invest in companies that rank high on measures of their environmental and societal metrics and governance practices. ESG investing backs companies prioritising the environment and human well-being in their daily operations.
The financials of these firms are more susceptible to environmental and social factors. ESG issues apply to all industries in some ways. Depending on the industry, the challenges can range from climate change and human rights to workplace inclusivity or health and safety.
According to Bloomberg Intelligence, total funds invested in some form of ESG asset will surpass $40 trillion by 2030. The growing interest in ESG investing is also luring less environmentally conscious actors to capitalise on the trend via marketing tactics to exploit investors' best interests. When a company positions itself as an ESG-compliant entity by offering misleading information about its practices to attract investors, it is called greenwashing.
The practice has been a big issue in the ESG sector, given that some of the biggest companies across industries have been accused and fined due to greenwashing. Unfortunately, these actions raise questions about the ESG principles used to align the underlying investments with sustainability goals, thus impacting investor confidence in the industry. If you are wondering what kind of false claims major corporations make, the.
