Name: What does ESG-friendly really mean? I FT
Uploaded: 2021-04-12T10:49:59.000Z
Duration: 4 min 43 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

that focus on environmental, social, and governance issues.

it is fundamentally changing the investment landscape.

While some investors want their money to go towards companies

others simply want to minimise the harm that their investments

Then there is a third group who are looking

to use ESG principles to protect their own portfolio

But no matter the motivation, all ESG investors

If it sounds straightforward, just know that this is much

For example, how do you decide whether a company deserves

the halo of being classified as ESG-friendly?

are better for the environment than traditional ones.

would have a positive effect on the environment

There are questions around the environmental impact

of mining nickel, which Tesla uses in its batteries

a car coming from renewable or non-renewable sources.

Tesla has also announced that it made a $1.5bn investment

And as has been pointed out by Bill Gates,

mining Bitcoin is an environmentally-damaging

activity because of the energy it requires.

These days most people don't have to make that decision.

that most folks choose an index-tracking fund,

puts their money into a basket of company stocks

have met certain criteria that make them ESG-friendly.

that provide an ESG focus have exploded from 2019 to 2020,

increasing by 40 per cent, according to the Index Industry

The amount of money going into ESG assets has also exploded.

according to the Forum for Sustainable and Responsible

which is more than a 100 per cent increase in just four

And as for figuring out which companies to put in those

indices we talked about, many index providers

rely on various metrics that score companies

Examples of metrics are things like exposure

to carbon-intensive operations, energy efficiency, human rights

between the ratings agencies, even when they're

Often, index providers will have a committee

that helps make decisions on which companies to include

This is important because the company stocks they include

has led to controversy over whether some funds are truly

investing in companies that fulfil the vision of ESG

or whether some index providers are merely

using it as a marketing term and putting the ESG label on funds

This is why it's so important for investors

to carefully read the methodology and perspectives

to ensure that they are getting something that truly reflects

So a question you may be asking right now

is whether the returns of those ESG funds

are better or worse than traditional investments.

you'll see that they perform pretty much in parallel

Some ESG funds may do better than the benchmarks.

But the beauty of ESG is that, in general, investors

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What does ESG-friendly really mean? I FT

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