Just as the trend toward conscious consumerism has shoppers looking into the types of companies they’re buying from, impact investing continues to prompt investors toward intentional investing. There were $17.1 trillion in assets responsibly invested in early 2020 in the US, an increase of 42% from two years prior. In this article, we’ll discuss how to start responsibly investing with a beginner’s guide to ESG investing, including what ESG investing is and some of the top ESG investments and ESG investing companies to consider.
What Is ESG Investing?
ESG investing, just like other types of investing, can benefit from clarity regarding investment terminologies, types, and the top options to consider when beginning or continuing to invest in a certain type of investment. When you first begin to consider investing in ESG investment options, one of the first steps is to learn the prudent details of what ESG investing involves and what the term means. ESG investing regards ESG, or environmental, social, and governance investments, which can help you build a more ethical or responsible investment portfolio. This type of portfolio can have several benefits.
While ESG investing relates to environmental, social, and governance investments, ESG factors are helpful to evaluate specific stocks and their related companies in these three key areas. These three key factors help indicate an investment or business’s sustainability and are considered non-financial, although you can still make a significant financial profit from investing in ESG stocks and companies. Investing in an ESG stock or company can lead to high financial returns as well as lower your downside risk in a turbulent market environment, with many funds showing strong, steadfast performance.
Environmental Factors
Environmental factors relate to environmental or natural world conservation. Some of the top examples of environmental ESG factors include carbon emissions, deforestation, water and air pollution, green energy initiatives, water use, and waste management.
Social Factors
Social factors relate to how a given business treats the individuals outside and inside the company. Some of the top examples of social ESG factors include employee gender and diversity, customer satisfaction, data security, human rights abroad and at home, and company sexual harassment policies.
Governance Factors
Governance factors relate to the way a given company is run or governed. Some of the top examples of governance ESG factors include the diversity of board members, executive pay, political contributions, large-scale lawsuits, lobbying, and levels of internal corruption.
Top ESG Investments
As ESG investments relate to the environmental, social, and governance aspects of a given stock or company, there are different ways to consider which ESG stocks and thus companies to invest in. ESG investments come in different forms. You may invest in an ESG stock or fund with a high ESG score. There are also several types of ESG investments to consider putting your financial efforts toward. Two of the current most popular types of ESG investments are ESG mutual funds and ESG stocks. An ESG mutual fund can build your portfolio quickly and diversify your holdings. ESG stocks can help you focus on a specific company you have an interest in supporting. They may also highlight current sustainable efforts.
When you start investing in ESG stocks and companies, it’s important to know that there are more options for ESG investments than ever before and EGÉA SRI is here to help you narrow down some of the top environmental, social, and governance investments and offer suggestions and solutions to provide you with the results you’re looking for financially and sustainably. You’ll begin by picking specific ESG investments, following the boundaries of ESG investing in contrast to socially responsible or ethical investing, opening a brokerage account if you’re new to investing, and then adding ESG investments to your portfolio. The top ESG investments can look different for everyone, depending on your specific interests and values within the definition of ESG.
Top ESG Investing Companies
When considering the top ESG investments and ESG investing companies, there are a couple of considerations. The top ESG investments for you depends largely on your unique interests and values within the confines of ESG. In addition to determining the top investments based on your ESG interests and values, you can also narrow down the top ESG investing companies based on their performance and ESG rating. Performance can include customer satisfaction, financial success, new customer numbers, and reviews or testimonials. How well is the company competing against similar businesses?
When looking at the top environmental, social, and governance investments for you, some examples include investing in specific environmental efforts, minority support organizations, and small or women-owned businesses. You can affect measurable change while supporting your financial statements. Depending on your interests and values, some of the current top ESG investing companies include Worthington Industries, J.B. Hunt Transport Services, Verisk Analytics, and Texas Instruments. These companies remain committed to ethical, sustainable practices while exceeding profitability goals.
Worthington Industries
Topping the list of the best ESG companies of 2022 is Worthington Industries. Worthington continues to take successful strides toward sustainability with recycling, community donations, local supplier support, and reduced emissions.
J.B. Hunt Transport Services
In second place for the best ESG companies of 2022 is J.B. Hunt Transport Services. J.B. Hunt continues to show climate change care by reducing carbon emissions, leading in fuel efficiency, reducing empty miles, and increasing energy efficiency.
Verisk Analytics
Then in third place for best environmental, social, and governance companies of 2022 is Verisk Analytics. Verisk continues to uphold commitments toward business ethics and conduct, environmental support, racial diversity and equity, and cybersecurity.
Texas Instruments
Another top contender for an ESG company to consider investing in as of 2022 is Texas Instruments. Texas Instruments continues to support board member diversity and environmental efforts against climate change and greenhouse gas emissions.
A Beginner to ESG Investing
If you’re a beginner to ESG investing, some guidance from EGÉA SRI can help you on your journey. Reach out to build your ESG portfolio today.
Disclosure:
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria exclude securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
