With the growing interest in environment issues, climate change and sustainability, investors and government are now focused on making sure Australian companies are paying attention. With global targets to meet and increasing inequalities in society, all governments are under pressure to balance economic needs with those of society as a whole. Stakeholders including investors, consumers and employees expect companies to have frameworks in place to guide this. Increasingly, good governance within ASX-listed companies includes disclosing wider issues within the business affecting local and global communities and progress to tackle these. We call this Environmental Social Governance (ESG) reporting. It is likely to become a strong focus point in the future as investors become more concerned about broader sustainability issues. ESG performance is likely to become more important as these matters emerge as a risk to business performance.
Many clients and family businesses choose to have ethical investing as a strong part of their ethos. This means actively avoiding companies that are involved in areas of concern like fossil fuels, animal cruelty, gambling, or human rights abuses. Ethical investing requires considerable research into the ESG results of companies. This includes positive screening which looks at which companies are making the biggest difference, and examining which businesses might have ‘impact investing’ at their core, or a mandate to solve global issues as a key driver.
If these are areas of interest to you or your family, please give dmca a call and we can make an appointment with a member of our financial planning team to discuss these matters.