Interest continues to grow on sustainable investments thanks to ESG consultancy firms‘ proliferation offering the much-needed insights and advice about responsible investing. With estimates valuing the ESG marketplace at about $250 billion, the push for investment opportunities is all but heating up.
Millennials have been the driving force behind the growing demand for ESG investments as most of them want to solve societal issues and generate returns from their investments. Likewise, fund providers anxious to capitalize on the strong interest have created a wide range of investment products to cater to the strong market demand.
Spoilt for choice on ESG products to invest in, impact investors are increasingly turning to ESG investment consultants in search of the much-needed advice needed to make informed decisions about impact investments. Likewise, demand for ESG consulting services is expected to continue rising.
Unknown to most investors is that ESG Investment consultants come with their fair share of benefits as well as pitfalls that serious investors should pay close watch to:
ESG Consultancy firms Benefits
Informed Decisions
ESG investment consultants prove to be highly reliable in providing the much-needed insight and advice needed to make informed decisions about ESG investments. By providing much-needed information and data on industries and investment opportunities, consultants allow impact investors to align investments with their values.
“Impact investors believe that investing in ESG focused companies and projects help combat things like climate change, gender inequality, and social injustice by boosting businesses that operate in a socially conscious manner,” said Ekaterina Chernova, The Altruist League Managing Partner.
Sustainable Performance
ESG consultancy firms are also living up to the hype in helping corporates institutionalize sustainable performance in the investment world. These insights and services go a long way in helping individual investors and institutions make responsible decisions capable of generating long term value. As a leading ESG consulting and advisory services firm, The Altruist League offers end-to-end support to customers.
“We assess and benchmark sustainability performance and bridge gaps as part of our sustainability consulting services. Our primary goal is to increase the return on investments on sustainability initiatives” said Milos Maricic, the Altruist League’s president
Avert Risk
Besides, ESG consultancy firms help companies determine in advance the kind of actions likely to impact their operations negatively. This is especially in response to environmental, social, and governance issues.
Such actions help companies improve their image and go a long way in shielding businesses from adverse events due to ESG issues. Preparing in advance allows companies to reduce the negative impact of adverse events while maximizing profits.
The Altruist League is one such ESG consulting firm that has carved a niche in providing clients with data-driven insights that help reduce risk related to ESG issues. The firm has built a name for itself on helping companies from all sectors discover long term impact investing opportunities.
ESG Consultancy firms pitfalls
Definition Uncertainty
One of the most significant downsides of relying on ESG consultancy firms is that there is still no clear cut definition of what ESG investing should constitute. ESG investments largely depend on investors’ perspectives.
True to the adage ‘one manager’s evil is another man’s saint,’ it is highly unlikely for consulting funds to offer ESG investments that meet all impact investors’ needs and requirements.
Take, for instance, a liquor company that could be good for society if it has an ethnically diverse board and provides the highest paying jobs. However, the same investment would be shot down by some investors who focus on the impact of its final product.
Data Deficiency
Another downside to ESG consulting firms is that most of them are new to the business or industry at large. Likewise, they are highly unlikely to share ESG ideas of profitable and sustainable projects or investments sure to generate long-term returns in return to having a positive impact on environmental, social, and governance issues.
Responsible investing is still in its early stages of development. Likewise, the lack of adequate information makes it impossible for ESG investment consultants to provide accurate and reliable information that impact investors can use to make informed decisions.
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