As the 21st century really starts to take hold, one of the most important places where huge differences will be made is in the investment community. And this change is built around the idea of ESG, which is an acronym for Environment Social Governance.
What this means in practice is that companies need to start incorporating sustainable technology to a much greater extent than they are at present. The downside is that if they fail to do this over the coming year, the huge corporate investors such as Black Rock and Fidelity, and many others, will no longer be willing to support them to the extent they are currently.
According to an article in OilPrice.com;
Over 3,000 investors with over $110 Trillion in assets under management support ESG investing. Another industry-led group of 70 members with $9 Trillion in assets under management does, too.
This trend is good news for two groups in particular.
One is the companies that are developing the technologies that make the ESG model work efficiently and effectively for the companies that will use this tech.
And the second group is the human race, which will benefit from an ever-improving environment, as the amount of fossil fuel being extracted from the earth, burned and spewed into the atmosphere, will start to dramatically decrease.
This sea change in the way business uses energy will have a certain amount of ripple into the market, but it will only be throughout the conversion period for each company. After that, the companies that invest in sustainability will start to see improved profitability, because their long-term energy costs and physical plant maintenance costs will be much lower. And they will also be looked on favourably by the investment community.
For anyone who is concerned about the environment, and its impact on both climate and the living things that occupy our planet this is the best news possible at the moment.
The investment community does not deserve all the credit for this decision.
The people of the world have a lot to do with it, in terms of the decisions they make in the marketplace, moving towards electric and hybrid vehicles, and toward the purchase of more environmentally responsible household products etc.
And governments also made their contribution. By joining the Paris Accord and creating ambitious new environmental standards, to help make their countries compliant.
The fact that companies are basically being read the riot act by the investment community is really the icing on the cake that will hopefully result in high levels of sustainability to offset the high levels of industrial pollution and non-recyclable waste that are currently so detrimental to our continued survival.
So if you have been worrying about the state of the world’s environment, this trend can do a lot to allay your fears, or at least diminish them to some extent.
There’s still a long way to go, but the world very much appears to at least have found the right road to travel on.
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