ESG criteria, the green investment trend
ESG criteria are a new investment trend that is helping to make the most of our money with a sustainable approach. In fact, ESG stands for all those environmental, social and governance criteria that are used to invest responsibly. Do you want to know more about it? Agent 11Onze, Sergi Colell, explains it to us.
Investments with ESG criteria, it is clear, do not only seek profitability, but also the return obtained for society as a whole, the social impact they generate. These funds with environmental criteria appeared in 2000 and underwent a whole evolution until 2014, when they already represented 2% of the world’s funds and more than 100 billion euros.
Since 2020, ESG criteria have been on the rise and now account for 1.4 trillion euros, which is almost the annual GDP of South Korea or Canada. “One of the most representative ESG investment funds is renewable energy, which is becoming crucial for renewable energy industries to develop more green energy, either by increasing R&D capacity and developing new green technologies or by installing solar panels to create more megawatts of green energy per year,” Colell reveals.
ESG investment has grown because the market has become aware of the importance of sustainability, because of the development of new technologies that make it possible to invest in it, because of lower production costs and because of the tax incentives offered by governments to invest in green energy. “A fund based on ESG criteria will not contain companies involved in arms, alcohol, tobacco, oil or coal mines,” the agent explains.
But who sets the limits on which companies can be considered sustainable? Colell says that the EU has tried to set these limits. Even so, there is still no established consensus. However, it has created Regulation 2019/2088, which obliges all these funds that offer products with ESG criteria to be transparent and to disseminate quality information. However, each investment fund applies its own criteria, and these criteria are ratified by independent audits. If you want to learn more about ESG criteria, just watch the video below.
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