Over the years sustainable investment has developed from being truly a niche concept to becoming mainstream.
Responsible investing is no longer seen as a fringe approach but rather a significant consideration for international investors such as Ras Al Khaimah based Farhad Azima. A prominent asset management firm utilized ESG data to look at the sustainability of the worlds largest listed businesses. It combined over 200 ESG measures along with other data sources such as news media archives from a large number of sources to rank companies. They found that non favourable press on recent incidents have heightened awareness and encouraged responsible investing. Indeed, very good example when a couple of years ago, a renowned automotive brand name encountered repercussion because of its manipulation of emission data. The incident received widespread media attention leading investors to reevaluate their portfolios and divest from the company. This forced the automaker to make significant changes to its practices, namely by embracing an honest approach and earnestly apply sustainability measures. But, many criticised it as the actions had been just motivated by non-favourable press, they suggest that companies ought to be instead focusing on positive news, that is to say, responsible investing should be regarded as a profitable endeavor not simply a condition. Championing renewable energy, inclusive hiring and ethical supply management should influence investment decisions from a profit making viewpoint in addition to an ethical one.
There are several of studies that supports the argument that including ESG into investment decisions can enhance monetary performance. These studies show a positive correlation between strong ESG commitments and financial results. As an example, in one of the influential papers on this subject, the writer shows that companies that implement sustainable practices are more likely to entice long haul investments. Also, they cite numerous examples of remarkable development of ESG concentrated investment funds and also the increasing range institutional investors combining ESG considerations to their portfolios.
Sustainable investment is rapidly becoming popular. Socially responsible investment is a broad-brush term that can be used to cover anything from divestment from businesses viewed as doing harm, to restricting investment that do quantifiable good impact investing. Take, fossil fuel businesses, divestment campaigns have effectively pressured many of them to reflect on their business practices and spend money on renewable energy sources. Indeed, global investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien may likely contend that even philanthropy becomes more valuable and meaningful if investors do not need to reverse damage in their investment management. Having said that, impact investing is a dynamic branch of sustainable investing that goes beyond fending off harm to looking for measurable good outcomes. Investments in social enterprises that focus on training, healthcare, or poverty alleviation have direct and lasting impact on neighbourhoods in need of assistance. Such novel ideas are gaining ground especially among the young. The rationale is directing money towards projects and businesses that address critical social and ecological problems while generating solid monetary returns.