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John Hale: What does good money mean to me?

As the number of us lucky to become investors grows, “good money” means investing not only for profit, but also for people and the planet.

Sustainable investment is a collective term for investment strategies that pursue competitive risk-adjusted returns along with environmental, social and governance (ESG) outcomes. In doing so, we support the transition to a more sustainable version of capitalism that focuses on creating value for all stakeholders, not just on shareholder primacy. To do.

Investors integrate ESG information to provide a broader perspective on the enterprise than using only financial indicators. This gives you deeper insight into your investment decisions. Second, this investor’s focus on ESG signals companies that they believe it is important for them to tackle ESG issues that are important to their business.

Other stakeholders are sending the same signal to the enterprise. Increasingly, customers and clients want to buy sustainable products and services. Employees are also talking about ESG issues because they want to work for a company they believe in. In the information environment of the 21st century, all these stakeholders, including investors, have a more public stance on corporate activities, impacts and more than ever.

As a result, stakeholder expectations for the enterprise are rising. No company wants to be seen as an ESG lag today as more customers, clients, employees and investors are tailored to the concept of sustainability. And many others aim to be sustainability leaders because they believe they will be rewarded with better customer loyalty, a more devoted and productive workforce, and diverse leadership to make better decisions. increase. Sustainability is increasingly seen as an element of business success in the 21st century.

Of course, that’s not the only boost to business success. Sustainable investors usually do not make decisions based solely on ESG factors. These factors are part of the overall mosaic that signals investment decisions. However, the existence of ESG indicators and the increasing number of investors using them have already changed the way many companies operate and plan their future operations. In this way, using ESG in the investment process can produce positive results not only for businesses, but also for people and the planet.

Jon Hale is Global Head of Sustainability Research for Morningstar Sustainalytics.

John Hale: What does good money mean to me?

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