Do you know what ESG investments are?

The current generation's concerns do not revolve around the possession of luxury goods or ostentation. In search of social and environmental responsibility and support for sustainable governance measures, a new type of investment has been in vogue in recent years and promises to be a competitive alternative to traditional financial products: ESG investments .

The term ESG, from the English environmental, social and governance , focuses on environmental, social and governance aspects. In practice, they serve as a way to guide the decisions of large corporations, governments and social actors, with the aim of adopting more sustainable behaviors.

To this end, the ESG metric was created to assess how large companies are able to develop from this perspective, which is in line with new trends in sustainable development and responsibility towards the environment and community .

ESG Parameters

Data from the B3 Stock Exchange points to a record number of Brazilians with investments in variable income: In January 2022, this number was 5 million accounts.

Based on these numbers, it is possible to observe the growth not only in Brazilians' interest in investments , but also in portfolio diversification and the adoption of products that reflect their own personality. From this scenario, ESG investments are gaining ground and traction.

For those who want to invest in companies with commitment and responsibility, it is necessary to know what makes up the acronym ESG. This way, the process of selecting and studying the investments to be made becomes easier.

E – Environmental

The E parameter of the acronym analyzes how a company deals with the environmental impacts that its business causes, such as waste disposal, emission of gases responsible for the greenhouse effect, etc.

S – Social

The social part of the acronym focuses on the company's social responsibility, such as supporting diversity, inclusion, employee well-being, encouraging healthy leadership practices, relationships with the community, among others.

G – Governance

In the governance section, the parameter analyzes how the company relates to internal policies and practices. Compliance measures, diversity in the advisory board, director, transparency and adoption of practices that encourage the fight against corruption are related to the acronym G.

Therefore, when someone decides to opt for ESG investments, not only the company's financial side and profitability are taken into consideration. This investor profile is strongly concerned with the factors explained above. It may be that the concern weighs more heavily on one parameter, but they are all important.

Are ESG investments profitable?

ESG parameters in investments are reasonably new factors, but they have gained more scope in recent years in the wake of consumer demands and stimulated by climate change and sustainable development goals.

Therefore, there are currently several ESG investments that a person can add to their portfolio. Before choosing where to invest their money, the investor can analyze the indexes of the Stock Exchange – B3, which help you find the best companies: Brazil ESG Index, Corporate Sustainability Index, Carbon Efficient Index and the Trade Corporate Governance Index.

To invest in ESG, it is possible to invest in investment funds, such as Multimarket Funds and Equity Funds, purchase shares directly, with the help of parameters to guide your choice and ETFs related to indexes, such as sustainability.

For the financial market, investing in ESG is profitable and will be the future trend, because the current generation, especially millennials , prioritize sustainability and environmental preservation, with a focus on good social and business practices.

Are you interested in Circular Economy ? On our website you can read more about the topic. Don't miss it!

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