How does ESG investing drive sustainability and climate change curbs?

ESG essentially nudges companies to do better when it comes to reducing their environmental footprint.

So by the same token, ESG investing means that retail investors take into consideration “the impact of investment on the environment and society at large”, says Endowus’ Min.

“Broadly speaking, it looks at how companies treat the environment and key stakeholders from different parts of society. Subsequently, ESG investing avoids irresponsible companies and prefers companies that are responsible corporate citizens.”

A company that puts the planet at the centre of its sustainability efforts could do so in a myriad ways, including offsetting its carbon emissions by embarking on a netzero plan, protecting the biodiversity in the environments it operates in, reducing water pollution and waste, or switching its energy supply from fossil fuels to natural sources.

You can invest in/purchase ESG-linked products including stocks, bonds, ETFs, mutual funds, and managed portfolios.

Maria Jelen, regional head of relationship management and sales trading for Asia Pacific at investment platform Saxo, adds: “Environmental factors are associated with a company’s impact on the environment (ie carbon footprint, greenhouse gas emissions), use and preservation of resources, waste management, pollution, as well as innovation efforts for the design of more sustainable products.”

Syfe’s Samantha adds: “ESG investing has gained significant ground because it is directly related to a spectrum of businesscritical issues such as the environment, water management, health and safety, board accountability and executive pay – these are issues that can directly affect not only a company’s reputation, but also its performance and stock valuation. It is clear that more people are putting their money where they can align their investments with the opportunity of driving positive outcomes in the world around them.”

She suggests “choosing efficient methods to invest in a diversified manner”, adding that Syfe uses “ETFs as the building blocks of our portfolios. ETFs are cost-efficient, and we select those with the lowest tracking errors and decent AUM (assets under management) size.”