Investors Are Leaning Away From ESG Investing, but Here's Why You Shouldn't Follow the Crowd
Traditionally, the main thing investors would use to determine whether to invest in a company is how much money it made. That's still one of the most important factors, but investors have increasingly begun to look past a company's financials and into its role in greater society. This has been evident with the increased popularity of ESG investing (environmental, social, and corporate governance).
The environmental part focuses on how a company's current operations impact the environment, as well as its commitment to operating in a more eco-friendly way and fighting climate change. This is particularly relevant to companies dealing with high energy use and fossil fuels. Socially, companies are graded on how they interact with employees, customers, and the greater community. Whether it's work culture, diversity, customer data privacy, or philanthropy, this aspect of ESG lets investors know where a company stands. Governance mainly focuses on a company's compliance, transparency, and truthfulness.
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Source Fool.com
