The Importance of Social services
According to a research by Harvard Business review, it was not until 2015 that few investors shifted focus onto environmental, social, and governance (ESG) information—mainly concerning companies’ carbon footprints, labor policies, board makeup, and so forth. Today this information is widely used by investors and financiers. Some screen out poor ESG performers, assuming that the factors that cause companies to receive low ESG scores will result in financial loss too. Some hunt for high ESG performers, expecting exemplary ESG operations to drive positive financial results with purpose, or wishing, for ethical reasons, to invest only in “green funds.” Other investors incorporate ESG into central analysis. While others use the data as activists, investing and then urging companies to clean up their acts.
Companies are likely to be more solid during unexpected surprises if they are managed for the long term and in line with societal causes. These mainly are concerning inclusion and climate. Covid 19 is a great example to this point. In the first weeks, when markets went bearish following the outbreak of Covid-19, most ESG funds outperformed their benchmarks. The data during the these unprecedented times suggested that the firms the public perceived as behaving more responsibly had better stock returns than their competitors. That’s why we believe that in longer term, social and environmental causes are likely to increase awareness that companies must take into account societal needs as a way to drive profits with purpose.