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 financial revenues.

Responsible investing is no longer seen as a extracurricular activity but instead an important consideration for global investors such as Ras Al Khaimah based Farhad Azima. A prominent asset manager utilized ESG data to examine the sustainability of the worlds largest listed companies. It combined over 200 ESG measures along with other data sources such as news media archives from several thousand sources to rank companies. They discovered that non favourable press on past incidents have heightened awareness and encouraged responsible investing. Certainly, a case in point when a few years ago, a renowned automotive brand name encountered a backlash due to its manipulation of emission data. The event received widespread media attention leading investors to reassess their portfolios and divest from the business. This forced the automaker to make significant changes to its methods, particularly by adopting a transparent approach and earnestly apply sustainability measures. But, many criticised it as the actions were only made by non-favourable press, they suggest that companies should be rather focusing on good news, in other words, responsible investing should be seen as a profitable endeavor not only a requirement. Championing renewable energy, inclusive hiring and ethical supply administration should influence investment decisions from a profit making viewpoint as well as an ethical one.

There are several of studies that back the assertion that integrating ESG into investment decisions can improve financial performance. These studies also show a stable correlation between strong ESG commitments and financial performance. For instance, in one of the influential papers on this topic, the author shows that companies that implement sustainable practices are much more likely to entice longterm investments. Also, they cite numerous examples of remarkable growth of ESG concentrated investment funds plus the raising range institutional investors integrating ESG factors in their investment portfolios.

Sustainable investment is increasingly becoming mainstream. Socially accountable investment is a broad-brush term that can be used to cover everything from divestment from companies viewed as doing damage, to restricting investment that do measurable good effect investing. Take, fossil fuel businesses, divestment campaigns have effectively compelled most of them to reflect on their business techniques and invest in renewable energy sources. Indeed, global investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien may likely contend that even philanthropy becomes far more effective and meaningful if investors need not reverse harm within their investment management. Having said that, impact investing is a vibrant branch of sustainable investing that goes beyond reducing harm to searching for quantifiable good outcomes. Investments in social enterprises that give attention to training, medical care, or poverty alleviation have a direct and lasting impact on neighbourhoods in need. Such ideas are gaining ground specially among young wealthy investors. The rationale is directing money towards investments and companies that address critical social and environmental issues while generating solid monetary profits.