ESG - Responsible and sustainable investment

Sustainable and responsible investment, with the acronym ESG (Environmental, Social, Governance), is one of the realities that investors must take into account when making decisions.

In a recentinterview with Funds People, Marcos Soares Ribeiro, President of CFA Society Portugal, even asked: Shouldn't all investments be responsible?

But an analysis by FactSet, which looked in the most recent earnings calls (Q1) of S&P500 companies whether or not the term ESG was referred to, concluded that the citation of this term dropped 51% when compared to conference calls from the previous quarter (Q4 ).

The importance of the pandemic theme stood out, but the growth trend of ESG factors will only have had less visibility and it will be interesting to analyze the initiatives and objectives in relation to sustainable and responsible investment in the future.

In fact, the recent evolution of equity markets with the huge disparity in returns between the various sectors and industries, can accelerate the new economy, more sustainable, more responsible.

The ESG profile replicates the trend to invest in a healthy and ethical manner, leaving out themes and sectors such as non-renewable energy, weapons, tobacco, gambling and alcohol, as well as companies and sectors that fail to comply with human rights and anti-corruption.

In this sense, several investment approaches have emerged based on the ESG profile. One of the latest additions comes from Vanguard which has launched 2 ESG equity index funds, based on developed markets and emerging markets.

The wide range of humanitarian, ethical, environmental and social concerns that many investors reveal and advocate will naturally have repercussions on how to invest. You will need to align your values ​​while meeting your investment objectives.

The role of financial markets in society, as a mechanism for anticipating and managing resources, also goes through this: by allocating capital in a way that is more aligned with the objectives and interests of investors and with the ESG profile.