As environmental, social, and governance (ESG) considerations become increasingly important for investors, understanding the concept of ESG investing is crucial. Here's a closer look at what ESG investing entails.
What is ESG investing?
ESG investing is an approach that integrates environmental, social, and governance factors into the investment decision-making process. Rather than focusing solely on financial metrics, ESG investors also consider a company's sustainability practices, its impact on the environment, its treatment of employees and communities, and its overall corporate governance.
What is the philosophy of ESG investing?
The core philosophy of ESG investing is the belief that companies that prioritize sustainability and responsible practices are more likely to create long-term value and mitigate risks. By considering these non-financial factors, ESG investors aim to identify companies that are well-positioned for the future.
What are the advantages of ESG investing?
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Driving Sustainable Development: ESG investing encourages companies to adopt more eco-friendly policies, improve social impact, and strengthen corporate governance, ultimately contributing to a more sustainable future. |
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Aligning with Personal Values: For many investors, ESG investing allows them to align their investments with personal beliefs and social responsibilities. |
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Promoting Corporate Accountability: ESG investing helps to hold companies accountable for their environmental and social impact, incentivizing them to improve corporate practices. |
What are the risks and considerations in ESG investing?
While ESG investing offers numerous benefits, it is important to be aware of potential risks and limitations, such as data availability, subjective interpretations, and the risk of "greenwashing" (when companies misrepresent their ESG practices).
What is the future of ESG investing?
As concerns about sustainability and social responsibility continue to grow, ESG investing is expected to become increasingly mainstream. Regulatory changes and investor demand are all driving the expansion of ESG investing, making it an increasingly important consideration for investors of all types.
How can investors evaluate ESG performance?
Assessing a company's ESG performance can be complex, as there are various rating agencies and frameworks available. Some of the leading ESG rating providers include MSCI, Morningstar Sustainalytics, and S&P Global. These agencies evaluate companies based on a range of ESG indicators and provide ratings that can inform investment decisions.
What ESG investment options are available?
Given the complexity of evaluating ESG performance at individual company level, many investors may find it more convenient to consider Unit Trusts that are classified as ESG funds by the Securities and Futures Commission (SFC). At BEA, customers can easily identify and filter ESG funds on our fund search platform.
How to search ESG funds in BEA online?
- Go to our fund search page (click <here>)
- Select ESG fund under Fund Type
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for further details.
for further details.Important Notice:
Investment involves risks. The price of units may go down as well as up as the investments of a fund are subject to the market fluctuations and the risks inherent in investments. Past performance is not indicative of future performance. Investors should not make an investment decision based solely on this material.
Investment in emerging markets involves above average investment risks, for instance, possible fluctuations in foreign exchange rates, political and economic uncertainties. It is possible that investors may lose some or the entire amount they have invested in the funds.
Before making any investment, investors should refer to all relevant investment funds’ offering documents, including but not limited to the Explanatory Memorandum, for detailed information including the risk factors.
The investment decision is yours but you should not invest in the investment funds unless the intermediary who sells it to you has explained to you that the investment funds are suitable for you having regard to your financial situation, investment experience and investment objectives.
The funds may not be available in all jurisdictions and may be subject to restrictions. If investors are in doubt, independent professional advice should be sought. This material has not been reviewed by the Securities and Futures Commission in Hong Kong.
Renminbi ("RMB") Currency risk: The value of the RMB fluctuates against other currencies and will be affected by amongst other things, control measures taken by the government of the People's Republic of China (“PRC”). (For example. the PRC government regulates conversion between the RMB and foreign currencies both in Hong Kong and China.) As a result, returns on a RMB fund may be adversely affected if said fund is converted to another currency. Furthermore, the RMB is not freely convertible at present, and conversion of the RMB through banks in Hong Kong is subject to certain restrictions.
The Bank of East Asia, Limited (BEA) is an agent of the third party fund house and the fund is a product of the third party fund house but not BEA.
For distribution of funds – In respect of an eligible dispute (as defined in the Terms of Reference for the Financial Dispute Resolution Centre in relation to the Financial Dispute Resolution Scheme) arising between BEA and the customer out of the selling process or processing of the related transaction, BEA is required to enter into a Financial Dispute Resolution Scheme process with the customer; however any dispute over the contractual terms of the product should be resolved between directly the third party fund house and the customer.
Issuer of this material: The Bank of East Asia, Limited
