Читать книгу ESG Investing For Dummies - Brendan Bradley - Страница 8

Introduction

Welcome to the ESG community! Thanks for picking up this book, in which I explain the ins and outs of ESG investing. As you may know, ESG stands for environmental, social, and governance, and perhaps the reason for your interest is the growing evidence that ESG factors can be integrated into investment analysis and portfolio construction to offer investors long-term performance advantages. Also, ESG criteria are used by socially conscious investors to screen investments and assess a company’s impact on the world. You want to know that the companies you’re investing in are “doing the right thing” or “doing no harm” as well as producing a positive return on investment.

With growing action from governments, companies, and investors to consider environmental and societal impacts, it seems inevitable that ESG considerations will be included in all of our investment decisions at some point in the future. Given that companies with high ESG ratings exhibit a lower cost of capital, less volatile earnings, and lower market risk than companies with low ESG ratings, sustainability should be our new standard for investing. Furthermore, all collective investment funds may be compelled to consider ESG criteria in their investments, alongside traditional financial factors.

However, be aware that there are many challenges to surmount before you reach the “promised land.” There is still a lack of common sustainability criteria, standardization of disclosure requirements, and therefore ESG ratings that can be questioned from a multitude of different rating providers. In short, the available data and the methodology behind ESG criteria for investment products is still opaque, and investors should carefully monitor what’s “under the hood” and not be victims of “greenwashing.”

About This Book

In writing this book, my primary aim is to educate potential ESG investors about the opportunities, but not to forget the potential risks. Many ESG-related books have been written, but the landscape has changed so much in just the last year that I felt there was a need to update investors, and also to be wary of the hype and not get caught up in the fear of missing out. So I focus in certain chapters on the developments around improvements in disclosure, leading to better data quality and more informed ratings of given companies, which in turn leads to better investment products. While the asset management industry is focused on voluntarily reaching these goals, given the “wall of investment” flowing into this space, there will also be increasing regulatory requirements to mandate behavior.

The idea here is to provide a pragmatic look at the most important aspects of ESG investing and highlight that this approach to responsible investment can help companies provide strong returns while helping to make the world a better place.

A quick note: Sidebars (shaded boxes of text) dig into the details of a given topic, but they aren’t crucial to understanding it. Feel free to read them or skip them. You can also pass over the text accompanied by the Technical Stuff icon. The text accompanied by this icon offers some interesting but non-essential information about ESG investing.

One last thing: Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply type in the web address exactly as it appears in the text, pretending the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click the web address to go directly to the web page.

Foolish Assumptions

I wrote this book so that all investors can understand it, but I assumed a specific type of audience. I considered the following readers:

 Financial service professionals who want to educate themselves about ESG and sustainability, instead of bluffing their way through

 Active investors who are considering increasing their asset allocation toward ESG criteria

 Asset owners who are relatively new to the concept and need to understand the nuances

 Company executives who recognize the need to “up their game” to improve their ESG score and ensure that their company is deemed suitable for ESG indexes and portfolios

 Professional service providers, such as accountants, consultants, and lawyers, who are trying to define their places in the ESG ecosystem

 Regulators, politicians, and other industry participants who are charged with safeguarding the investment community

The general assumption is that you’ll have some experience with and understanding of traditional investment, but you can build your ESG understanding as you progress through this book or dive into certain chapters that are more specific to your role or interest.

Icons Used in This Book

Like all For Dummies books, this book features icons to help you navigate the information. Here’s what they mean.

This icon highlights especially helpful advice about getting started with ESG investing.

If you take away anything from this book, it should be the information marked with this icon.

This icon points out situations and actions to avoid in the world of ESG investing.

This icon flags information that delves a little deeper than usual into a particular ESG investing topic.

Beyond the Book

In addition to what you’re reading right now, this book also comes with a free access-anywhere Cheat Sheet that provides a mini-glossary of important ESG terms and an overview of the key topics that are driving ESG investing. To get this Cheat Sheet, simply go to www.dummies.com and search for “ESG Investing For Dummies Cheat Sheet” in the Search box.

Where to Go from Here

You don’t have to read this book in strict chapter-driven order. Each chapter is self-contained, so you can jump around as much as you like. Flip to the table of contents and the index if you’re looking for a specific topic. If you want to find out more about ESG and keep up to date on the latest developments, you should check out the following objective websites:

 Principles for Responsible Investment: www.unpri.org/sustainability-issues

 United Nation Sustainable Development Goals: www.un.org/sustainabledevelopment/sustainable-development-goals/

 Sustainability Accounting Standards Board: www.sasb.org/standards-overview/materiality-map/

 Global Reporting Initiative: www.globalreporting.org/how-to-use-the-gri-standards/

 Task Force on Climate-related Financial Disclosures: www.fsb-tcfd.org/about/

 ESG Clarity: www.esgclarity.com/