Why renewable energy investments are surging

Why renewable energy investments are surging

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Studies display a positive correlation between ESG commitments and monetary returns.

Responsible investing is no longer viewed as a extracurricular activity but instead an essential consideration for international investors such as Ras Al Khaimah based Farhad Azima. A prominent asset manager used ESG data to examine the sustainability of the worlds largest listed companies. It combined over 200 ESG measures with other data sources such as news media archives from 1000s of sources to rank companies. They found that non favourable press on recent incidents have heightened awareness and encouraged responsible investing. Indeed, very good example when a couple of years ago, a well-known automotive brand faced a backlash due to its manipulation of emission data. The incident received widespread news attention causing investors to reexamine their portfolios and divest from the business. This compelled the automaker to create big modifications to its methods, specifically by adopting a transparent approach and earnestly implement sustainability measures. However, many criticised it as its actions had been just motivated by non-favourable press, they argue that companies ought to be instead focusing on positive news, in other words, responsible investing must certainly be regarded as a profitable endeavor not only a condition. Championing renewable energy, inclusive hiring and ethical supply management should encourage investment decisions from a revenue viewpoint along with an ethical one.

Sustainable investment is increasingly becoming popular. Socially accountable investment is a broad-brush term which you can use to cover everything from divestment from companies seen as doing harm, to restricting investment that do quantifiable good impact investing. Take, fossil fuel companies, divestment campaigns have successfully forced most of them to reevaluate their business techniques and spend money on renewable energy sources. Indeed, global investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien would likely argue that even philanthropy becomes more valuable and meaningful if investors need not undo harm in their investment management. On the other hand, impact investing is a vibrant branch of sustainable investing that goes beyond reducing harm to seeking quantifiable positive outcomes. Investments in social enterprises that focus on training, medical care, or poverty alleviation have direct and lasting impact on regions in need. Such innovative ideas are gaining traction especially among the young. The rationale is directing money towards projects and businesses that address critical social and environmental problems whilst producing solid monetary returns.

There are a number of reports that supports the assertion that incorporating ESG into investment decisions can improve monetary performance. These studies show a stable correlation between strong ESG commitments and financial results. For example, in one of the authoritative papers on this topic, the author demonstrates that businesses that implement sustainable practices are much more likely to attract longterm investments. Moreover, they cite many examples of remarkable development of ESG focused investment funds and the raising number of institutional investors incorporating ESG factors in their stock portfolios.