ESG Investing: Doing Well While Doing Good

ESG (environmental, social, and governance) investing has exploded in popularity in recent years. This approach considers how companies perform on important issues like sustainability, ethics, and corporate governance. ESG aims to align investments with values while still pursuing returns. The ESG movement recognizes that factors like climate change, diversity and inclusion, and executive compensation impact shareholder value. Investors are increasingly demanding companies measure and disclose performance on these metrics. Funds focused on ESG-friendly firms have attracted major inflows.

Some key drivers of the ESG investing boom: Climate change threats are motivating investments in low emissions companies and clean technology. This supports the transition to a greener economy. Social justice issues like diversity, gender pay gaps, and labor rights are becoming reporting priorities. This pressures companies to act more ethically. Scandals over excessive executive compensation have increased focus on governance and board accountability. Studies show funds screening for ESG factors can match or even exceed broad market performance over time. Investors don't have to sacrifice returns.

As millennials and Gen Z demand more purpose-driven investing, ESG considerations will become standard in evaluating companies. Doing well financially while doing good is attracting both idealistic and pragmatic investors alike. The ESG movement empowers people to make an impact with their money.