More than ever, people want to be fully informed about what they are eating — not only the calories, but whether it’s gluten-free, pesticide-free, organic or raised with growth hormones. They even want to know if the packaging is recyclable. Why? Because they’re seeking to avoid risks to their health and to the environment. In the same way, investors today are well aware that risk can come from a variety of places — and that’s helping to fuel an interest in environmental, social and governance (ESG) investing.
In the past, investing according to your values, or anything other than financial fundamentals, was seen as a potential detriment to performance. Over time, however, investors have learned that non-financial metrics can help them better understand the risks a company faces, and may even impact that company’s stock price.