ESG

When an investor wants to invest his money in a fund, he will want to invest according to the financial parameters.

As a responsible citizen, you should also follow the ESG rules where they get the benefit from the investment part.

Only financial parameters but also non-financial parameters should be taken care of.

Usually, when a company is selected for investment, it is selected on the basis of financial parameters.

But now, modern investors are investing while keeping in mind not only financial parameters but also non-financial parameters. 

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ESG:



E- Environment Empathy

S-Social

G- Corporate Governance

E- Environment Empathy:

Glaciers are melting due to environmental pollution. The global average temperature is increasing, global warming is increasing,

 forests are decreasing, rivers are getting polluted. All this is happening because no one is paying serious attention to it, but that doesn't mean it's all over.

 If we can increase renewable energy, increase greenery, and improve management, then we can run our company without harming the environment. 

Social Responsibility:

Wherever we do business or open a company, they do it somewhere in society. 

 Therefore, it is the responsibility of the corporation to take care of this society as well.Keeping this in mind, a law has also been made in India.

Under the Companies Act 2013, 3% of the profit of the company for three years is spent on social responsibility.

Corporate Governance:

The one who looks after the management of the company and the business should look at the whole business and the people working within it with complete integrity and honesty.

The manager, CEO, and MD of the company are the items. They should not only see their profit but also see both the profit and loss of the overall business and the company. 

What is ESG Investment? 

The way people invest in any fund, in the same way modern investors invest their money in ESG funds.

And there are experts who take care of your fund. They will invest this money in those companies that follow ESG parameters very well.Because these companies do not harm the environment, society, or governance with their benefits, that's why such companies keep running for a long time.

Why is there so much focus on ESG now? 

It is not that the concept of ESG is completely new; it has been in existence for a long time.

Then all of a sudden, what happened that it has become so trending?

The reason for this is that modern investors, who are the new age investors, are changing their investing methods. 

They want the corporates to focus not only on the financial parameters but also pay attention to all the other needs. Now, since any company is there, it needs money to run its company for the long term.But when citizens want to invest in only those companies that follow ESG parameters well, then any company will increase its focus on ESG and cause less damage to natural resources. 

What about returning from ESG? 

Many times, you may wonder if there will be any benefit from investing in ESG.

Research has shown that companies that do not follow the ESG perform very poorly.

In the long term, they are not able to succeed. In the short term, they may make some profit, but they are not able to survive for a long time. 

Sometimes there is a labour strike in their company and sometimes account fraud is found, due to which these companies suffer huge losses.

Companies that follow of ESG policies, on the other hand, out perform for an extended period of time.

ESG'S CURRENT STATUS

Globally, ESG is getting bigger with each passing year. 

There are 3,300 ESG funds globally, and the number has tripled over the last decade. 

The value of global assets applying ESG for investment decisions today stands at 

$4.5 trillion. 

Which sector or companies will lose out due to ESG?

According to experts, companies that do not follow the ESG policy, such as tobacco, coal, and cigarette companies, have done so for thousands of years. Leaks out and doesn't handle it properly. Those companies may suffer because smart investors do not want to invest their money in them. Due to companies that spend more water and do not recycle water, the soil is polluted.

When water and air pollution levels rise, such businesses may suffer significant losses.

Thus, we can say that the ESG concept will be 100% successful in the eyes of the local community. Because everyone wants their society, environment, and governance to be in equal balance. That's why every company and website should follow the ESG policy honestly.