One of the hottest topics in investing these days is ESG. This is a new strategy to investments because it factors in criteria beyond short-term financial returns as important.
E = Environmental
Does the company you invest in track their carbon emissions, contribute to deforestation, or produce pollutants in the air?
S = Societal
Does the company you invest in have fair labor practices? Does it treat its workers right?
G = Governance
Does the company have a board of directors? Does it govern equitably and have diverse leadership?
Currently there isn't a clear way to evaluate if a company is actually using ESG metrics properly because there isn't a standardization. Some investors fear "greenwashing," a term used when a company claims to be environmentally-conscious but there appears to be other motives (such as cutting costs by reducing plastic packaging.) On the other hand, some investors are upset about ESG standards because they fear that putting the metrics into practice will reduce the overall returns of shareholders.
Books about Green Investing to Check-Out from BPL!
Arnell, R. Scott. (2022) Sustainable & Responsible Investing 360° Lessons Learned from World Class Investors. Rowman & Littlefield Publishing Group, Inc.
Arnell’s interviewees have more than 700 years of combined professional investment experience with trillions in assets under management. Somewhere along their professional journey, each made a personal and professional commitment to use investing as a proactive force for good. Now they reap not just financial rewards but gain profound satisfaction knowing that they are helping improve the world and the lives of those in it. “My goal in researching and writing this book,” Arnell explains, “was to reveal how these experts integrate non-financial criteria into their investment decisions to successfully achieve environmental and social impact in the world alongside market-rate financial returns. I also wanted readers to understand how the individual life voyages of these leading investors led them to commit to engaging exclusively in Sustainable and Responsible investing, hopefully inspiring others to reflect on their own investing philosophies.”
Bradley, B. (2021). ESG Investing For Dummies. John Wiley & Sons.
This book navigates the scope of ESG investing (Environmental , Social and Governance), gives the history of Socially Responsible Investing, and considers the issues involved with ESG integration and the complexity of regulating a standard ESG metric.
Ginn, W. (2020). Valuing Nature: A Handbook for Impact Investing. Island Press.
As the world faces unprecedented challenges such as climate change and biodiversity loss, the resources needed far outstrip the capabilities of nonprofits and even governments. Yet there are seeds of hope—and much of that hope comes from the efforts of the private sector. Impact investing is rapidly becoming an essential tool, alongside philanthropy and government funding, in tackling these major problems. Valuing Nature presents a new set of nature based investment areas to help conservationists and investors work together.
Mobius, M., Von Hardenberg, C., & Konieczny, G. (2019). Invest for Good: A Healthier World and a Wealthier You. Bloomsbury Publishing.
How do individuals - rather than institutional investors - invest using ESG criteria? And just how complex are the procedures? This new book, written by investment guru Mark Mobius and his expert team, is full of entertaining and informative anecdotes from the authors' day-to-day experiences in the world of sustainable investment. Readers will gain a clearer understanding of what sustainable investment actually means, the positive effects it can have on businesses and societies, what to look for in order to identify sound and sustainable investment opportunities, and how to balance sustainable investing with good returns.
Silvola, H., & Landau, T. (2021). Sustainable Investing: Beating the Market with ESG. Palgrave Macmillan.
This book provides both academic findings and practical models for assessing the sustainability of investees and introduces practical tools and methods to make ESG analysis practice. It focuses on the ESG analysis of equity investments and fund investments in institutional investment organizations and provides a handbook for all investment analysts who are involved with investment decisions. Readers will benefit from understanding the methods, opportunities and challenges that professionals use in their ESG analysis with cases, interviews and practical tools for both institutional and private investors.
Sherrell, D. (2021). Warmth: Coming of Age at the End of Our World. Penguin.
Climate Activist Dan Sherrell shares his own emotional roller-coaster ride of trying to reconcile his dreams for the future with his nearly life-long knowledge that “the Problem” threatens everything he cares about. The book takes shape as a letter to a hoped-for child he may never have because of his fears for the future. He also talks about his efforts to successfully persuade his university to divest from fossil fuels.
Swedroe, L. E., Adams, S. C., & Malkiel, B. (2022). Your Essential Guide to Sustainable Investing: How to live your values and achieve your financial goals with ESG, Sri, and impact investing. Harriman House Ltd.
The authors first define sustainable investing, illuminating the differences between ESG, SRI and impact investing, and reveal who is currently investing sustainably and why. They then move on to a comprehensive review of the academic research. What does the data really say about risk and return in sustainable investing? What performance can you genuinely expect from sustainable investments? And how are today’s sustainable investors using their influence to drive positive changes for society and the environment? Finally, this book arms you with a practical guide to investing sustainably,including how to effectively choose your asset allocation strategy, and select the managers and funds through which your money can create the change you want to see in the world.
Usher, B. (2022). Investing in the Era of Climate Change. Columbia Business School Publishings.
Bruce Usher offers an indispensable guide to the risks and opportunities for investors as the world faces climate change. He explores the role that investment plays in reducing emissions to net zero by 2050, detailing how to finance the winners and avoid the losers in a transforming global economy. Usher argues that careful examination of climate solutions will offer investors a new and necessary lens on the future for their own financial benefit and for the greater good. Companies that reduce greenhouse gas emissions will create great wealth, and, more importantly, they will provide a lifeline for humanity.
