The growing trend of seeking out both financial and social returns known as responsible or sustainable investing is being driven in part by millennials who want to align their investments with their personal values.
As they start to accumulate wealth, many millennials are putting their money into companies with a strong environmental, social and governance (ESG) track record.
Examples include companies with a diverse board and management team, companies that work pro-actively to reduce waste, water and emissions, or that give back to communities by creating long-term jobs or building schools to help educate future generations.
The most common types of sustainable investing are socially responsible investing (SRI), which excludes companies based on certain criteria, and ESG, a more broad-based approach focused on protecting a portfolio from operational or reputational risk.
Socially responsible investing goes one step further than ESG by actively eliminating or selecting investments according to specific ethical guidelines.
With SRI, investors pick stocks based on a set of standards such as positive or negative screening, the level of shareholder engagement or community/impact investing.
With screening, for example, a company might be excluded if it does not have a gender-diverse board of directors.
ESG investing considers a broader set of due diligence questions on how environmental, social and governance factors impact performance, both positively and negatively.
For instance, a cement producing company might be considered a responsible investment if it’s working continuously to reduce emissions in its operations, has a strong safety record and is giving back to the communities where it operates.
We as the regulator and investors are coming together to improve environmental, social, and governance standards in our capital market to help identify growth opportunities, manage risks, and promote sustainability in our country.
Upcoming AGMs and EGMs
Mashonaland Holdings Limited, the Boardroom, 19th Floor, ZB Life Towers, 77 Jason Moyo Avenue, 18 March 2019, 1200 hours.