Maybe you’ve taken a shine to Impact Investing. Maybe you’ve been using the ESG criteria and analysed the values of a few companies. Maybe along the way, you’ve even invested in shares and found your stock exchange soulmate – nice one! But did you know Impact Investing can lower your financial risk and increase your returns?
How? Well, you remember the saying ‘knowledge is power’. It’s like that. Here’s an example: a wealthy company with a bad track record of pollution and environmental damage (highlighted in their ESG) starts a mining project near a protective waterway. The low share prices will tempt some investors, but the impact investor may notice the new mining project has a high chance of being sued. By doing a bit of research, the impact investor has firstly identified this company doesn’t align with their values – and secondly, lowered their overall financial risk. Win win!
Tips and tricks
The more you know about a company and their ESG, the better decisions you can make. ESG criteria is now used by over 50% of big investors, because it is such a good indicator of long term stability.