The ESG Investing Trend and Its Perks

1 minutes reading time
Published 18 Sep 2023

Companies are becoming more ESG (Environmental, Social, and Governance) friendly for a variety of reasons. One primary reason is the growing recognition that businesses have a responsibility to not only deliver financial returns to their shareholders but also to operate in a way that is sustainable and beneficial to society and the environment. In addition, consumers are increasingly aware of the impact that businesses have on the environment and society and are often more likely to support companies that are committed to ESG principles.

Several Perks

There are many potential benefits to becoming ESG-friendly. For instance:

  • Improved brand reputation can lead to easier access to capital – at more attractive valuations.

  • Employee engagement and retention can increase.

  • Companies that prioritize ESG factors are often seen as more responsible and trustworthy.

  • Investors are becoming increasingly interested in ESG-friendly companies and are more likely to invest in them.

Being seen as an ethical and caring company not only helps with the examples above. It will also but the company in a better position in terms of pricing power, chances of winning government contracts, as well as attracting the best talents.

Investing in ESG Companies

ESG is becoming increasingly important for investors, retail investors, and professionals alike. Sustainable investing, as it’s also sometimes called, entails investing in companies that follow ethical business practices with concern and consideration for the environment and the workers involved in production. Investing sustainably is viewed by some investors as a way to both see potential returns on capital and drive positive change while doing so.

By conducting Master Search in Quartr Pro and analyzing mentions for "ESG" in company earnings calls we can see a steady increase since 2020.

A trending graph showing mentions of "ESG" from Company Earnings Calls since 2020
There has been a steady increase of ESG mentions in company earnings calls

These are total mentions, but the trend is quite similar if we adjust it to display unique number of events mentioning esg instead. Needless to say, the ESG investing trend is still pointing upwards even if we change the search parameters.

Moving With the Times and Becoming ESG-Friendly

Overall, becoming ESG-friendly can help companies build a more sustainable and profitable business over the long term, while also contributing to a more sustainable and equitable society. Some examples of companies working to become more ESG-friendly are Coca-Cola, Microsoft, and Unilever.

Coca-Cola has been focused on ESG issues for many years and has made a number of initiatives. For instance, the company has set a goal to reduce its carbon footprint by 25% by 2025 and has invested heavily in renewable energy sources.

The tech giant Microsoft is committed to a range of ESG initiatives, including reducing their carbon emissions and increasing their use of renewable energy.

Last but not least, the consumer goods company Unilever, has implemented several initiatives towards sustainability across their entire supply chain. They have set ambitious goals to reduce their environmental impact, and are focused on promoting social equity and improving the well-being of their employees and communities.

These are merely examples of large and well-established companies picked out to illustrate ESG initiatives. ESG is becoming increasingly important for consumers, governing bodies, and the people working and running companies large and small, and the trend of becoming more aware of ESG is one that is likely to continue well into the future.