Investors, too, favour different ESG investing strategies for themselves:
Thematic investing. Some choose to invest in green companies. For example, some finance the construction of solar panels, while others finance wastewater treatment. It pays off: the value of similar European firms grew 448 per cent between 2007 and 2015.
Positive selection. Investors favour companies that best comply with ESG principles in their industry. Solar energy producer Sonnedix, for example, has built a power plant to such an anti-storm standard that hurricanes damage no more than 0.5 per cent of its solar panels. Consequently, the company loses less money in natural disasters than other manufacturers.
Negative selection. Investors refuse to invest in specific companies or sectors that do not support ESG principles: producers of alcohol, tobacco, weapons or petroleum products. For example, although the Dakota Access Pipeline was built, its operator is mired in lawsuits from tribes that have lost clean water. Investors in that firm lost some of their money, and an ESG investor wouldn’t even invest in it.
Direct involvement. Some investors begin to actively influence the companies in which they have invested: demanding resolutions and votes on environmental and social issues, even changing management for better governance.
