ESG Investing Business Article
ESG INVESTING SHAPES COMPANIES BUT PUBLIC AWARENESS REMAINS LIMITED: HOW BUSINESSES CAN BRIDGE THAT GAP
Written by: Nerolie Santana
Investment companies, businesses, and political administrations are transforming and promoting Environmental, Social, and Governance (ESG) investing principles within corporate decision-making. However, concerns persist that the general public may still lack understanding regarding these ESG advancements.
News Gallup explores the diverse viewpoints of the American public, as well as partisans and other U.S. and global organizations, seeking alternative ways to incorporate progressive ESG goals without adversely affecting shareholders. Lydia Saad of News Gallup says, "The leaders and companies embracing ESG in investing have espoused it as a way to minimize investment risk while promoting social goods." Despite ongoing data, limited growth is observed in businesses considering these strategies. Polls have indicated only a 1% increase in the general public's familiarity with ESG investments over the past two years, with just 36% of individuals being very familiar with the concept in 2021. These factors significantly impact businesses' consumerism, services, and investments - So, how can businesses increase this percentage?
FundFlows Inc. analyst, Sam Bebak, highlights a major obstacle: the lack of clear definitions for the "E," "S," and "G" components. Bebak says “While companies may market services and smart investment strategies, it is ideal to emphasize the story behind their fund and why it is a good option for shareholders and consumers to choose them.” Bebak suggests viewing it not as a marketing strategy, but as serious research aimed at establishing the company's credibility.
Companies should focus on aligning with clients' goals and how this alignment can have a significant impact on the environment, social causes, and governance. Despite facing criticism, ESG does not appear to face overwhelming factors driving the interest or views about the public interest. News Gallup investigations reveal no significant difference in familiarity with ESG between Republicans and Democrats. Only when asked to choose between the two investing modes do the majority of Republicans and Democrats take opposing sides. Therefore, businesses should prioritize greater transparency, aligning with public interest, and highlighting the "E," "S," and "G" elements.
Additionally, News Gallup highlights that retirement fund criteria preferences closely align with established national averages. Approximately 50% of fund managers focus on financial factors, while 46% want ESG factors to be considered. Stewart Diegelman, Ticker Tape Research Principal, says some ESG initiatives resonate with people who choose to invest in companies poised to address climate change and avoid risks. "It's just a matter of finding the one with the message that hits them," says Diegelman.
As investment companies, businesses, and political administrations embrace ESG investing principles, concerns persist regarding the general public's understanding and familiarity with these advancements. Although ESG investments have expanded, public awareness remains limited. However, leaders and companies advocating for ESG present it as a means to minimize investment risk while promoting social welfare. To increase familiarity and engagement, businesses should prioritize clear definitions and emphasize how their funds align with shareholders' and consumers' goals. Criticisms surrounding ESG have not significantly impacted public interest or views, as familiarity with ESG does not differ greatly between Republicans and Democrats. Therefore, businesses must prioritize transparency and public interest to enhance understanding and promote greater engagement with ESG principles. Moreover, it is noteworthy that retirement fund criteria preferences closely resemble national averages, indicating a growing interest in investing in companies addressing climate change and risk mitigation. Businesses can seize this opportunity by effectively delivering their message and resonating with investors seeking to align their investments with long-term sustainability and personal values.
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