ESG and sustainable investment: Do you know what it’s all about?
Do you know what ESG means? This abbreviation is used in the field of investment, but it is not something that relates directly to finance. It is a term associated with sustainability and care for our planet. But why should you care about it?
What to invest in today? Into cryptocurrencies, mutual funds, gold, or companies? Which ones? Those who prosper and behave responsibly towards the environment. Yes, investors now routinely look at this criterion as well. Who today doesn’t care about the environment? Who acts as if it didn’t exist? This is also true when it comes to mutual funds or shares. People today are more conscious – they’re interested not only in the return on investments, but also in who they actually support with their money.
The ESG sticker helps you navigate
And that’s why we have ESG. This abbreviation comes from three English words: Environment (concern about environmental impacts), Social (takes into account social responsibility) and Governance (evaluates the approach to company management). So you don’t yourself have to watch world events and examine how a company behaves. Many brokers and intermediaries through which you can invest in companies simply use ESG. And what, for example, do they look at when evaluating companies? Let’s take each category separately.
Environment:
- the company publishes a public assessment of its carbon footprint or sustainability,
- limits harmful pollutants and chemicals, and
- uses renewable energy sources.
Social:
- the company has an ethical supply chain,
- promotes LGBTQ rights and diversity, and
- pays fair wages to both men and women.
Governance:
- the company is transparent, and
- promotes diversity in company management.
Czech companies take ESG into account
If you think that ESG is only a foreign issue, you’re mistaken. Czech companies are also paying attention to this criterion, planning to invest over one hundred billion crowns in ESG by 2025. Almost half of companies perceive this topic as important, some expect higher profitability thanks to ESG.
Czech companies want to focus on water management infrastructure, electrification of transport and emission-free energy, recycling, and the consumption of water and electricity. Czech interest in ESG increased even during the coronavirus period, and our companies believe that ESG regulation will be strengthened in the Czech Republic. They are convinced that not only investors, but also the public and employees are interested in this topic. So far, Czech companies are not afraid that banks will also be looking at this criterion when they apply for loans.
Sustainable investing and KLAUS Timber
KLAUS Timber is one of those companies who respects its relationship to the environment as it develops. It is committed to continuously improving its environmental profile and focuses on those components of the environment that it can directly influence. It’s acquiring state-of-the-art technologies that are also considerate to the company’s surroundings, it respects nature, and it’s looking for alternative sources of energy (for example, it’s currently working on the installation of photovoltaics). As far as transport is concerned, all vehicles owned by the company meet the EURO 6 emission standard, and KLAUS Timber is currently expanding its possibilities in rail transport by building a railway siding to its premises in Dvorec.
At the same time, it’s a matter of course for KLAUS Timber to set fair conditions for all its employees and create equal employment opportunities for both men and women. The company also prides itself on transparency and communication with the public, and regularly publishes all information about events in the company, including the results of an independent audit. It certainly meets the ESG criteria in these areas and will increasingly look to ESG as a quality label in the future.
Is ESG related to stability and profit?
And finally, information for investors. Investing in ESG-compliant companies doesn’t have to be a compromise when it comes to value for money. As Vladimír Weiss, advisor to the Partners group, points out, companies that do not behave responsibly towards society and nature are unlikely to succeed going forward. That’s certainly the case if tightening regulations in the US, Europe, and China are anything to go by. Investing in companies that meet ESG criteria is definitely worth it.
