Studies prove a positive correlation between ESG commitments and financial returns.

Responsible investing is no longer viewed as a extracurricular activity but rather an essential consideration for international investors such as Ras Al Khaimah based Farhad Azima. A prominent asset manager utilized ESG data to look at the sustainability of the worlds largest listed companies. It combined over 200 ESG measures along with other data sources such as for example news media archives from a huge number of sources to rank companies. They discovered that non favourable press on past incidents have heightened awareness and encouraged responsible investing. Certainly, very good example when a few years ago, a notable automotive brand encountered repercussion due to its adjustment of emission data. The event received extensive media attention causing investors to reevaluate their portfolios and divest from the business. This pressured the automaker to make substantial changes to its practices, specifically by adopting an honest approach and earnestly implement sustainability measures. But, many criticised it as its actions had been only made by non-favourable press, they suggest that businesses must be instead concentrating on positive news, in other words, responsible investing ought to be regarded as a lucrative endeavor not simply a condition. Championing renewable energy, comprehensive hiring and ethical supply management should encourage investment decisions from a profit making viewpoint as well as an ethical one.

Sustainable investment is rapidly becoming mainstream. Socially responsible investment is a broad-brush term which you can use to cover anything from divestment from businesses viewed as doing damage, to limiting investment that do quantifiable good effect investing. Take, fossil fuel companies, divestment campaigns have effectively pressured most of them to reflect on their business techniques and invest in renewable energy sources. Indeed, international investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien would probably contend that even philanthropy becomes much more valuable and meaningful if investors do not need to reverse harm in their investment management. Having said that, impact investing is a vibrant branch of sustainable investing that goes beyond avoiding harm to looking for quantifiable positive outcomes. Investments in social enterprises that concentrate on training, healthcare, or poverty alleviation have direct and lasting impact on communities in need. Such innovative ideas are gaining traction particularly among young investors. The rationale is directing money towards projects and companies that address critical social and ecological problems whilst generating solid financial profits.

There are several of studies that supports the assertion that including ESG into investment decisions can improve financial performance. These studies also show a stable correlation between strong ESG commitments and monetary performance. For example, in one of the influential papers about this topic, the author highlights that companies that implement sustainable methods are much more likely to attract long term investments. Moreover, they cite many instances of remarkable development of ESG concentrated investment funds and the increasing number of institutional investors integrating ESG factors in their stock portfolios.