Environmental, Social and Governance (ESG) as a concept has gained wide currency in recent years. As the financial market attaches increasing importance to it, a growing number of companies also consider the inclusion of ESG factors into their operational principles an imperative. Such strategy helps build a better world, reduce damage to the environment and society, and create wonderful opportunities.
Profitability should not be the only thing that companies strive for. Social and environmental responsibilities are just as well important. Overlooking ESG factors not only threatens the supply chain, but also puts a company’s goodwill and stock prices at risk.
Exponential growth in socially responsible investments4
Sales of electric vehicles reach new highs
Driven by environmental concerns and significant advancement in battery technology, sales of electric vehicles are expected to increase by 90 times between 2015 and 2040, and account for 35 per cent of total car sales5.
Millennials a big driving force behind ESG
Millennials are concerned about environmental and social issues. Up to 72 per cent of the survey British respondents aged
21-38 find the concept of Impact Investing appealing6.
4Source: Global Sustainable Investment Review, 2018.
5Source: BloombergNEF, 25 February 2016.
6Source: American Century Investments, October 2019.
Lower - carbon investment opportunities shine
Companies with good ESG performance tend to have better corporate governance, and hence the advantage of long-term sustainability. Integrating ESG factors into the process of investing not only brings benefits to society, but also effectively manages risks, and creates opportunities for investors.
How does ESG investing work?7
Three advantages of lower-carbon investment strategies7
Lower-carbon investing is an important aspect of ESG strategy.
It actively manages climate change risks while bringing opportunities to investors.
Both lower-carbon equity and bond strategies provide diversification benefits across geographies and sectors.
Applying lower-carbon strategies does not mean sacrificing investment returns8
7Source: HSBC Asset Management. For illustrative purposes only.
8Source: Bloomberg, HSBC Investment Management, net total return indices (in USD terms), as of end February 2020.
Investment involves risks. Past performance is not indicative of future performance.
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