Finding the Right Sustainable Investing Options That Match What’s Important to You
For investment professionals, ESG analysis is essential in helping them better understand the companies they choose to invest in.
Considering environmental, social, and governance (ESG) issues enable investors to determine a company’s long-term viability and the potential for appreciable risks that could develop in the future stemming from these areas of growing global importance.
At Vistia Capital, our ESG investment team has the technical experience and practical knowledge to help you understand this growing field and find sustainable investment opportunities that align with your social goals and environmental priorities.
What is ESG Investing?
ESG stands for Environmental, Social, and Governance. Savvy investors have started incorporating these non-financial factors into their analysis when determining the viability of an investment opportunity to assess potential growth opportunities and areas of risk. While companies are not required to disclose their ESG metrics in financial reporting, many have already adopted disclosure as part of their annual reports.
Several global organizations, such as the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI), are working to create defined standards and metrics to provide investors with greater transparency and to make it easier to determine whether a company meets the ESG standards it claims to set.
What is Sustainable Investing?
Traditional investing offers value by transforming investor capital into investment opportunities that balance potential risk with anticipated returns. Sustainable investing offers value by balancing environmental, social, and governance-related (ESG) insights with traditional investing in improving financial outcomes over the long term.
Many investors view sustainable investing as an evolution of traditional investing. A growing recognition among investors and financial advisors that ESG factors are economic factors makes it essential to incorporate ESG insights when determining the viability of any potential investment.
Essential ESG Factors
ESG offers a barometer for investors interested in using their money to positively impact the world to determine whether their views align with a company’s stated position on the role sustainability, social responsibility, and transparent decision-making play in influencing their core principles and best practices.
(Conservation of Nature)
Climate change and carbon emissions
Air and water pollution
Fossil fuel consumption
Greenhouse gas emissions
(Consideration of People and Relationships)
Diversity, equity, and inclusion
Data protection and privacy
Humane labor practices
(Standards for Running a Business)
Bribery and corruption charges
Executive pay scale and bonus structure
Transparency and accountability
The Keys to Successful ESG+F Investing
Successful ESG investing requires not losing sight of maintaining a solid Financial position when assessing an investment’s risk and long-term viability. Establishing ESG+F standards ensures our clients can make informed sustainable investing decisions when selecting projects to support.
By conducting a thorough analysis, the firm can identify potential risks and evaluate the probability and potential impact of those risks. This enables our team to make more informed investment decisions that help mitigate risk.
Due diligence helps ensure the investment opportunity is high quality and meets the firm’s investment criteria. It involves evaluating the financial and operational performance of the company and its stated ESG goals.
Investing with a firm that conducts thorough assessments helps protect investors from fraudulent schemes or opportunities unsuitable for their ESG investment objectives.
Our systematic review process also increases investors’ chances of achieving their ESG investment goals. Due diligence enables the firm to avoid investments that may not meet expectations.