⭕️ Ethical investing – or #ESG – has been the buzzword of the financial world since 2013.
🔨 When poor working conditions led to COVID-19 outbreaks across industries, people and investors started to pay more attention to social issues.
Here's why that matters to companies. 🧵
💭 Firstly, what even is #ESG?
In the financial world, they are standards used to assess a company beyond its profits by measuring how it protects the environment as well as communities.
We break down what it stands for and why it is so important. ⬇️
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🔨 Paying workers fairly
🌏 Supporting communities
👤 Championing diversity and inclusion
🤝 The "S" – or social #ESG criteria – look at how a company affects people’s rights.
⭕️ They broadly demonstrate the values and priorities of a business to investors and the public.
🤔 But what does it actually mean?
▶️ If a company undermines people's basic rights and equality, their performance risk is much higher.
💼 But if they understand what those risks are – and actively work to reduce them – it sends a positive message to investors.
💸 Does it make financial sense?
🟢 Many people say yes.
📚 Studies show that promoting social factors can mean larger profits and longer-term survival.
📉 Decisions to cut costs may be profitable in the short-term, but ultimately erodes the value of a business.
⏪ Back in 2020, one of Britain's biggest fashion brands lost £2bn in market value because it had poor labour practices and low pay for garment workers.
❌ This lead to a potential U.S. export ban on their products and an investigation into their supply chains.
🔥 Putting social issues first could help tackle the #ClimateCrisis.
💰 A first step from scientist @rolandfgeyer: raise the wages of the world's 35 million garment by $100 a week.
🌎 The outcome? 65.3 million metric tons of CO2 would be cut, he claims. bit.ly/3LuVu7h
🗣️ Could companies hide behind promises with no real action?
💰 Nearly all stock exchanges and regulators now expect companies to report on some aspects of the "S" in #ESG.
✏️ But more needs to be done to make this mandatory and not voluntary.
🏁 How hard is it for companies to do better?
🧑🤝🧑 Social issues can be tough to pin down and evaluate – but it’s not impossible.
💭 We break down 5⃣ myths investors use to overlook measuring and reporting on the “S”, and how to combat them. ➡️ esg.trust.org
What else do you want to know about ethical investing?
💭 Want to know more?
Watch our explainer on why social investing could be the next big thing. ⬇️
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