socially responsible investing given a consistent measurable framework
environmental, social and governance
Socially responsible investing can be achieved via a sound environmental, social and governance framework. Applying these non financial factors in portfolio construction requires quantitative scoring that holistically accesses an enterprise's carbon footprint and environmental impact as well as the quality of the company's interactions within their communities and regions and certainly also how these firms manage their business and employees. Lucky for us, the marketplace for ETFs has evolved to include hundreds of ESG focused funds allowing us to construct diversified, targeted ESG centric portfolios focused on positive long term investment results.
Businesses that incorporate ESG practices may avoid environmental, legal and regulatory consequences and because of this possibly outperform peers over the long run. However, an ESG based portfolio's performance may also possibly lag relative to other investment portfolios as ESG portfolios may be more expensive to construct, ESG businesses may have higher standards and thus are more expensive to operate and ultimately there are fewer high ESG grade investable enterprises.
Be aware that you may forego long run investment results as you are subsidizing socially responsible initiatives.