ESG Investing For Dummies

Your guide to investing for a more sustainable world

Investing in one's own future has always been a good financial move. But what if you want to ensure that the companies you have a financial interest in are also helping to improve the present and future of all of us--and of the planet? More than ever before, sustainable investors want to be confident that a company's Environmental (net zero emissions target), Social (response to the Covid-19 pandemic), and Governance (no repeats of Enron and WorldCom) policies and actions are positively impacting the global outlook--and to identify ways that their dollar can incentivize business leaders to do even better. The worldwide rise of an Environmental, Socially Responsible, and Governance (ESG) approach to investing shows you're not alone, and the $30+ trillion--and growing--committed in this way says it's already become a transformative global movement. ESG provides a framework for evaluating companies that, unlike unrelated investment strategies, informs and guides sustainable investment.

Even if you're a novice investor, ESG For Dummies will allow you to hit this new investing landscape running, providing you with measurable ways to factor ESG into company performance, see how these are reflected in your investment return, and show how you can monitor companies to ensure your money is being put to ethical use. You'll also become familiar with the big names to follow in the ESG world, how they're already effecting positive change, and how you can help.

• Identify the drivers for each category of ESG
• Define and measure material ESG factors for investing success
• Understand principles for building a diversified sustainable portfolio
• Recognize material ESG factors effect on company performance

ESG investing introduces powerful tools to do real and lasting good: this book shows you how to use them to help make everyone's future, including your own, much more secure.

Auteur

Brendan Bradley is co-author of FinTech For Dummies. He fosters and develops support for new ­investment areas, including AI-assisted research for automated modeling and transforming ­unstructured financial content in the ESG ecosystem.

Texte du rabat

Your guide to investing for a more sustainable world Investing in one's own future has always been a good financial move. But what if you want to ensure that the companies you have a financial interest in are also helping to improve the present and future of all of us--and of the planet? More than ever before, sustainable investors want to be confident that a company's Environmental (net zero emissions target), Social (response to the Covid-19 pandemic), and Governance (no repeats of Enron and WorldCom) policies and actions are positively impacting the global outlook--and to identify ways that their dollar can incentivize business leaders to do even better. The worldwide rise of an Environmental, Socially Responsible, and Governance (ESG) approach to investing shows you're not alone, and the $30+ trillion--and growing--committed in this way says it's already become a transformative global movement. ESG provides a framework for evaluating companies that, unlike unrelated investment strategies, informs and guides sustainable investment. Even if you're a novice investor, ESG For Dummies will allow you to hit this new investing landscape running, providing you with measurable ways to factor ESG into company performance, see how these are reflected in your investment return, and show how you can monitor companies to ensure your money is being put to ethical use. You'll also become familiar with the big names to follow in the ESG world, how they're already effecting positive change, and how you can help. Identify the drivers for each category of ESG Define and measure material ESG factors for investing success Understand principles for building a diversified sustainable portfolio Recognize material ESG factors effect on company performance ESG investing introduces powerful tools to do real and lasting good: this book shows you how to use them to help make everyone's future, including your own, much more secure.

Contenu

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 3

Beyond the Book 3

Where to Go from Here 3

Part 1: Getting to Know ESG 5

Chapter 1: Entering the World of ESG Investing 7

Surveying the Current ESG Landscape 8

Exploring What ESG Is (and Isn't) 9

Defining the breadth of ESG 10

Comparing SRI, ethical, and impact investing to ESG 14

Determining whether ESG delivers good investment performance 16

Understanding ESG's Impact on the Environment, Society, and Governance 17

Meeting environmental and global warming targets 17

Providing solutions to social challenges 18

Meeting corporate governance requirements 18

Using International Standards to Determine ESG Objectives 19

Leading the charge: European legislation on ESG 20

Ahead of its time: The United Nations 21

Staying focused: The Sustainability Accounting Standards Board 21

Building a framework: The Global Reporting Initiative 22

Chapter 2: Back to the Future: Understanding the Evolution and Growth of ESG Investing 23

Studying the Evolution of Investing in ESG 24

Investing through the ages: From SRI to ESG 24

Go green: The changing global environment 27

On trend: Changing investor demographics 28

Crunch the numbers: Evolving data and analytics 29

Exploring the "Personality" of an ESG Company 31

Determining material ESG factors 31

Performing a materiality analysis 32

Applying weights to materiality measures 33

Understanding Why ESG Is Important 34

Global sustainability challenges 35

The interest of millennial investors in ESG 35

More systematic, quantitative, objective, and financially relevant approaches 36

Surveying Specific ESG Ratings and Metrics 36

Data quality, ratings bias, and standardization 37

Issues with ESG scoring 38

ESG momentum importance 39

Applying artificial intelligence and data science to ESG analysis 39

Defining an ESG Policy 40

Familiarize yourself with ESG and asset owner-specific legislation 40

Undertake a peer review 41

Review your statement of investment beliefs and core investment principles 41

Specify responsible investment guidelines 41

Outline responsible investment procedures 42

Include engagement and active ownership approaches 42

Spell out reporting requirements 43

Chapter 3: Give Me an 'E'! Defining the Environmental Sector in ESG 45

Outlining a Company's Use of Natural Resources 46

CO2 or GHG? Climate change and carbon emissions 46

Clean and green: Energy efficiency 48

A crisis awaits: Conservation of water 49

There is no Planet B: Air and water pollution 50

Live and let live: Biodiversity 51

See the forest for the trees: Deforestation 52

Don't throw your future away: Waste management 54

Studying the Effects of a Company's Operations on the Environment 55

Direct operations 55

Supply chains 56

Defining "Green" for a Company 57

Internalizing (or managing) externalities 58

The 3Rs: Reduce, reuse, and recycle 58

Detailing a Company's Performance as a Steward of the Physical Environment 60

Managing operations to reduce emissions and promote sustainability 61

Collaborating with others to create solutions for environmental issues 61

Chapter 4: Give Me an 'S'! Investigating the Social Aspects of ESG 63

Identifying Factors in a Company's Social Performance 65

Customer satisfaction 65

Data protection and privacy 66

Gender and diversity 68

Employee engagement 69

Community relations 70

Human rights 71

Labor standards 72

Evaluating a Company's Social Performance 73

The results are in: Achi…