Financial Perspective – How to align your values and your investments
Increasingly, financial institutions are offering investment solutions that let you invest according to your values. What does that really mean?
A study released by Morgan Stanley early in the year reported that more than half of individual investors were planning to increase their allocations to responsible investing in 2024. Moreover, 70% of these people believe that this type of investment could lead to better returns than ones that don’t use a responsible investing approach.
Which raises a question: what, exactly, sets a “responsible” investment apart from the rest?
Three letters to remember: ESG
In the world of finance, responsible investing means taking into consideration three major areas when making investment decisions. These three areas are designated by the acronym “ESG”: environment (E), social (S) and governance (G). The first area includes issues such as climate action, energy transition, resource depletion and water management. The second covers human rights, child labour and relations with Indigenous peoples, among other things. Last but not least, the third area is focused specifically on criteria associated with executive compensation and board composition, as well as corporate diversity, equity and inclusion…