Environmental, social, and governance (ESG) investing has been anything, but all sizzle and no steak. The ESG space has been outperforming even amid the Covid-19 pandemic and is actually helping to further catapult the space into the limelight.
“Prior to COVID-19, the potential fallout from the upcoming climate crisis was too esoteric for many to grasp,” wrote David Rachelson in a Green Biz article. "Some organizations saw enacting sustainability best practices within their business as a “nice to have” rather than an essential element of their competitiveness, profitability and their future success. Despite report after report indicating that today’s consumers look to a business’s sustainability practices before making purchasing decisions, some organizations chose to look the other way in a misguided attempt to maximize revenue in the short term, without a thought to the long-term corporate health and, indeed, the long-term profitability of their organization."
“The economic benefits of sustainability and the circular economy never have been more clear. According to the deVere Group, a leading independent financial advisory, ESG investments have come to be regarded as safe havens for 56 percent of investors,” the article noted.
Get ESG in ETFs
ETF investors looking for plays in ESG can look to funds like the FlexShares STOXX US ESG Impact Index Fund (ESG ). For investors who want ESG exposure, as well as global diversification, can look to the FlexShares STOXX Global ESG Impact Index Fund (ESGG ).
ESG seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® USA ESG Impact Index. The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to ESG characteristics relative to the STOXX® USA 900 Index, a float-adjusted market-capitalization weighted index of U.S.- incorporated companies. Under normal circumstances, the fund will invest at least 80% of its total assets in the securities of the underlying index.
ESGG seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® Global ESG Impact Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to environmental, social, and governance characteristics relative to the STOXX® Global 1800 Index, a float-adjusted market-capitalization weighted index of companies incorporated in the U.S. or in developed international markets. The fund will invest at least 80% of its total assets in the securities of the index and in ADRs and GDRs based on the securities in the index.