WHAT IS ESG INVESTING?
ESG Investing focuses on three specific factors: Environmental, Social, and Governance.
ESG investing means purposefully investing in companies that meet certain criteria with respect to
their use of resources (environmental)
how they are run (governance),
or their impact on employees and society (social).
It is not new, but it is growing in popularity and over the past several years as investors recognize these factors can impact a company’s performance in the marketplace. At Passport Wealth Management, these factors are a part of our investment management approach.
WHAT FACTORS ARE INVOLVED IN ESG INVESTING?
ENVIRONMENTAL
How companies deal with environmental regulatory requirements can say a lot about their adaptability. Is the company taking unnecessary risks through regulations and compliance? While a board may decide that the benefits outweigh the risks, an investor may not.
SOCIAL
Social factors deal with three sub-areas, Consumers: customer satisfaction, data protection & privacy; Employees: employee engagement and retention, leadership, labor practices, and employment standards; Outsiders: community relations & industry relations.
GOVERNANCE
We look at boards of directors, their audit committee structure, their record on bribery and corruption, how they compensate executives, and how they deal with whistleblowers. We expect that “good governance” leads to better-run companies, producing average or better returns.
ENVIRONMENTAL
How companies deal with international, national, and regional environmental regulatory requirements can say a lot about their ability to adapt to a rapidly changing world. Is the company taking unnecessary risks about regulations, compliance, and best practices that open it up to risk in the long-term? While a Board may decide that the benefits outweigh the risks, an investor may not.
SOCIAL
Social factors deal with three sub-areas that can impact a company’s profitability and long-term adaptability. Consumers: customer satisfaction, data protection & privacy; Employees: employee engagement and retention, leadership, labor practices, and employment standards; Outsiders: community relations, and relationships with other industries.
GOVERNANCE
How well are these companies run? Looks at boards of directors, their audit committee structure, their record on bribery and corruption, how they compensate executives, and how they deal with whistleblowers. We expect that “good governance” leads to better-run companies, producing returns that are in line with—or are sometimes even better than—the rest of the market.
WHAT FACTORS ARE INVOLVED IN ESG INVESTING?
ENVIRONMENTAL
How companies deal with international, national, and regional environmental regulatory requirements can say a lot about their ability to adapt to a rapidly changing world. Is the company taking unnecessary risks about regulations, compliance, and best practices that open it up to risk in the long-term? While a Board may decide that the benefits outweigh the risks, an investor may not.
SOCIAL
Social factors deal with three sub-areas that can impact a company’s profitability and long-term adaptability. Consumers: customer satisfaction, data protection & privacy; Employees: employee engagement and retention, leadership, labor practices, and employment standards; Outsiders: community relations, and relationships with other industries.
GOVERNANCE
How well are these companies run? Looks at boards of directors, their audit committee structure, their record on bribery and corruption, how they compensate executives, and how they deal with whistleblowers. We expect that “good governance” leads to better-run companies, producing returns that are in line with—or are sometimes even better than—the rest of the market.
ENVIRONMENTAL
How companies deal with international, national, and regional environmental regulatory requirements can say a lot about their ability to adapt to a rapidly changing world. Is the company taking unnecessary risks about regulations, compliance, and best practices that open it up to risk in the long-term? While a Board may decide that the benefits outweigh the risks, an investor may not.
SOCIAL
Social factors deal with three sub-areas that can impact a company’s profitability and long-term adaptability. Consumers: customer satisfaction, data protection & privacy; Employees: employee engagement and retention, leadership, labor practices, and employment standards; Outsiders: community relations, and relationships with other industries.
GOVERNANCE
How well are these companies run? Looks at boards of directors, their audit committee structure, their record on bribery and corruption, how they compensate executives, and how they deal with whistleblowers. We expect that “good governance” leads to better-run companies, producing returns that are in line with—or are sometimes even better than—the rest of the market.
HOW DOES PASSPORT WEALTH MANAGEMENT HELP WITH ESG INVESTING?
ESG is the GPS of investing. Compared to a map and compass, GPS is not necessarily better, but it is more information. We incorporate ESG data into investment management decisions for client portfolios guided by the client’s Investment Policy Statement (IPS).
Does ESG data help?
Research increasingly shows that ESG portfolios perform similarly to non-ESG portfolios, and that incorporating ESG data may provide an improved return over the long run.
Does ESG improve the risk-return profile?
Some market professionals believe that ESG information may result in less risk since ESG funds could help weed out companies that are a greater financial risk due to their governance, environmental, or social practices.
EXPLORE
EXPLORE
This is our opportunity to sit down and discuss what matters to you and the challenges you’re facing. We need to understand who you are and what makes you tick before working with you to develop your plan.
STRATEGIZE
STRATEGIZE
Tell us your goals and recommend how you achieve them from a financial standpoint. This might include changes to how you’ve managed your investments in the past, tax planning strategies and your estate.IMPLEMENT
IMPLEMENT
We take the action steps from the strategy and execute them. Many of these items will be taken care of together. Others may require us to include other professionals, such as your CPA, insurance agent, or your estate attorney.
ADAPT
ADAPT
Over time your goals and needs may change. Your financial plan must adapt to this change. We’ll reassess your strategy together and adapt your financial plan to achieve your new goals. This may include revising estate documents or insurance plans.
EXPLORE
EXPLORE
This is our opportunity to sit down and discuss what matters to you and the challenges you’re facing. We need to understand who you are and what makes you tick before working with you to develop your plan.
STRATEGIZE
STRATEGIZE
Tell us your goals and recommend how you achieve them from a financial standpoint. This might include changes to how you’ve managed your investments in the past, tax planning strategies and your estate.IMPLEMENT
IMPLEMENT
We take the action steps from the strategy and execute them. Many of these items will be taken care of together. Others may require us to include other professionals, such as your CPA, insurance agent, or your estate attorney.
ADAPT
ADAPT
Over time your goals and needs may change. Your financial plan must adapt to this change. We’ll reassess your strategy together and adapt your financial plan to achieve your new goals. This may include revising estate documents or insurance plans.
For more information on our investment management philosophy, ESG investing, or holistic financial planning, please give us a call at (704) 457-0060. Passport Wealth Management works with clients around the world from our offices on the shores of Lake Norman in Cornelius, North Carolina. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.
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