ESG stands for environmental, social and governance. These are 3 key elements most companies look for before investing money and time into a company.
Investors are using this non-financial factor to identify any risks in a company. These can be material risks, but also growth opportunities. Therefore, investors prefer to invest in companies with high ESG ratings. Some companies claim that ESG rating providers are not providing accurate ratings which can be unfair.
Companies need to become more aware of incorporating ESG into their products and services. Investors are willing to buy from companies with high ESG ratings than those with low ESG ratings. This benefits the economy as it plays a role in preventing global warming which promotes the UK’s Environmental Law 2021. Climate change is affecting human lives now and will in the future, therefore investors looking at ESG strategies of a company will help us now and in the long run.
By Gulsum Qane , BeComAware Student Ambassador.
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