Full Show Notes

EGS as a Subset of Value-Based Investing

Sustainable investing is the process of incorporating environmental, social, and governance (EGS) components into your investment opportunities. This type of investment has, for the longest time, been perceived as a simple do-good approach that only the ultra-rich can take part in. However, the past couple of years have witnessed a surge in the number of assets under wealth management that focus on sustainable investments. This is mostly due to the fact that most millennials prefer to pursue investment opportunities that align with their personal values. In the past, people only focused on their investments’ environmental impacts, but the industry has grown to incorporate both social and governance factors. 

How To Implement EGS Investing

Most investors are often excited by the prospect that their investments could positively influence the world. A good example is financing an electric car company due to your dislike for fossil fuels. However, your company of choice must show tangible evidence of how they are implementing their EGS policies. This is because some companies only have policies used to lure investors when their behavior gives an entirely different picture.  

Risk Versus Returns

Investors are often worried about how EGS policies affect their returns. The thing to ask yourself is whether you’re prepared to give up a portion of your returns to a noble cause. Most people, especially those in retirement, would rather not compromise their return potential and thus opt-out of these opportunities. The thing to note here is that you can get a great performing opportunity that presents value and aligns with your personal preferences. With this in mind, some charitable givers have been gradually adopting socially responsible investing because it’s more sustainable. The average charity model is structured so that if donors pull out, the organization is practically crippled. With EGS, however, charities can create money-making opportunities with investor money and make a positive social impact while doing it. 

Investment Opportunities in the EGS Space

As earlier mentioned, some companies don’t follow through with their vision and mission statements on sustainable investments. Unfortunately, it’s a little hard to judge whether a company is making strides in the right direction. The good news is that large industry players are already coming up with lucrative opportunities and still guarantee positive EGS impacts. Nonetheless, before you consider EGS investing, think about the areas you care about and the areas you detest. The other thing you need to know is whether the company is fully committed to fully implementing it’s set mandate.