If you want to make smart investments, you should take ESG investing into account when making your financial decisions. There are so many factors to keep in mind when spectating a suitable company, but the knowledgeable advisors at Maggi Tax are here to show you the risks to be aware of with ESG investing as a crucial step in strategic investment planning.
ESG Investing Explained
ESG stands for Environmental, Social, and Governance. These are the main factors that help investors determine whether a company is sustainable or not so that they can make smarter decisions by minimizing risks and ensuring growth and opportunity. But how exactly can you evaluate companies using this metric? Consider these main risks with ESG investing:
1 – The World’s Climate
It’s no secret that our planet is hurting in a number of ways, and so government officials are looking for solutions to help change that. One method involves upping the eco-friendly standards for how companies operate, with the push towards clean energy being a major one. Now, investing in companies that are prone to class-action lawsuits for continuing to produce high CO2 emissions can be seen as a huge financial risk.
2 – Access To Information
Investors love to play it safe, and having access to important information helps with their decisions. Companies must now provide the means for their investors to track vital data which can be either good or bad depending on how well the company in question operates. Disclosing data may reveal something that would cause investors to opt out and cause the company to crash.
3 – Social Standpoints
Companies are no longer just about the goods and services that they provide, but also their ethics. Labor issues have become such a big deal that investors will quickly turn the other way if it becomes known that a company is treating its employees unfairly. This includes the topics of fair wages, labor violations, boycotts, and more.
4 – Growing Demands
Back on the topic of sustainability, companies must now spend time and resources finding ways to offer ethical and eco-friendly options that can compete with their rivals while also keeping their investors close by. Since this is a pressing issue, there is always the chance of a company not being able to find a solution or presenting a faulty solution due to rushed efforts.
5 – Reputation Regarding ESG
The act of a company not considering ESG is an ESG risk in itself. ESG investment has become so important in how investors act that not having any regard for the program can hurt a company’s reputation. Investors can view the company’s ignorance as an unwillingness to be current by today’s standards or a failure in being risk-conscious.
Navigating ESG Investing With Maggi Tax
ESG investing can be overwhelming, especially when you consider all of the risks involved. If you want to be smart in where you place your money, call (727) 799-1701 to schedule a complimentary consultation with Maggi Tax! You can speak with a skilled financial advisor about how to make worthwhile investments that are more likely to pay off. Don’t let your money and efforts go to waste, contact us today to get started!