In recent times people are inclining towards making an ESG based investment. Environmental, Social, and Governance are the attributes taken into consideration while investing in various companies.
Companies not complying with these factors may give a bad impression to the investors. It is quite an unusual combination of environment, social sector, and governance altogether.
Since the covid-19 pandemic, the ESG investment has boosted and still a top priority for investors. All over the world, many countries are attentively making decisions based on ESG factors.
Though we cannot call ESG an investment plan, it is more of an additional aspect added to the strategy. The basis of evaluation is selecting a set of companies that focuses on the ESG factors.
The companies failing to collect points on the basis of these factors are poor for making an investment. Such evaluation mat results in encouraging companies to maintain the activities keeping in view of the ESG parameters.
The question may arise as that why pay attention to such evaluation. The answer lies in the word itself: ESG. Many companies went above the limit with a sole motive to earn huge profits and grow their investors. As a result, harming the environment, increasing pollution and the list goes on. The companies may overlook the legality of the activities with a motive to gain profits.
Companies generating electricity through coal are providing an indispensable source but at the same time harming the environment. Therefore, the shift of investor towards choosing companies which gives importance to these factors will promote the idea of betterment.
The companies will become aware and will make an effort to erode such activities.
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