Over the years sustainable investment has developed from being a niche concept to becoming mainstream.
Responsible investing is no longer viewed as a fringe approach but instead a significant consideration for international investors such as Ras Al Khaimah based Farhad Azima. A prominent asset manager utilized ESG data to examine the sustainability of the worlds largest listed businesses. It combined over 200 ESG measures with other data sources such as for example news media archives from a huge number of sources to rank companies. They found that non favourable press on past incidents have heightened understanding and encouraged responsible investing. Indeed, very good example when a few years ago, a renowned automotive brand name faced repercussion because of its manipulation of emission information. The incident received widespread media attention causing investors to reassess their portfolios and divest from the business. This forced the automaker to create substantial changes to its techniques, namely by adopting an honest approach and earnestly apply sustainability measures. Nevertheless, many criticised it as the actions had been only pushed by non-favourable press, they argue that businesses should be alternatively emphasising positive news, that is to say, responsible investing should really be viewed as a lucrative endeavor not only a requirement. Championing renewable energy, comprehensive hiring and ethical supply management should shape investment decisions from a profit making viewpoint in addition to an ethical one.
Sustainable investment is rapidly becoming mainstream. Socially responsible investment is a broad-brush term that can be used to cover everything from divestment from companies viewed as doing damage, to restricting investment that do quantifiable good effect investing. Take, fossil fuel businesses, divestment campaigns have successfully pressured many of them to reevaluate their business practices and spend money on renewable energy sources. Certainly, international investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien would likely contend that even philanthropy becomes far more effective and meaningful if investors need not undo damage in their investment management. On the other hand, impact investing is a dynamic branch of sustainable investing that goes beyond avoiding harm to seeking measurable positive outcomes. Investments in social enterprises that focus on training, medical care, or poverty elimination have direct and lasting impact on regions in need of assistance. Such innovative ideas are gaining traction especially among young investors. The rationale is directing capital towards projects and companies that tackle critical social and ecological problems whilst producing solid financial returns.
There are several of reports that back the argument that incorporating ESG into investment decisions can improve financial performance. These studies also show a stable correlation between strong ESG commitments and financial performance. As an example, in one of the authoritative papers on this topic, the writer shows that companies that implement sustainable practices are much more likely to invite long term investments. Furthermore, they cite many examples of remarkable growth of ESG concentrated investment funds as well as the increasing range institutional investors integrating ESG considerations in their investment portfolios.