Earth Day 2022: Learning the What, Who, and How of ESG Investing

What Is ESG?

As Earth Day 2022 is celebrated, the ESG investment strategy is becoming increasingly popular. The term broadly refers to environmental, social, and corporate governance factors, and how companies approach those issues.

Looking at the term more deeply, investors that employ an ESG strategy tend to ask how a company’s business model impacts the environment, such as its carbon footprint or potential use of toxic chemicals. On the social side, ESG investors pay close attention to concerns like racial diversity, LGBTQ+ equality, and inclusionary hiring. Finally, governance refers to how effectively the company’s management pursues environmental and social issues.

Leading ESG Industries

Some of the world’s leading financial research firms rate companies according to ESG standards and provide them with scores. This is typically determined by reviewing things like annual reports and sustainability efforts. Market observers consider some industries to be more successful than others in terms of ESG policies.

Waste management is one such industry that has received positive marks for things like car battery recycling and a focus on reduced landfill usage. So-called utility disruptors are another area of ESG growth, with solar and hydrogen-powered microgrids being used to provide electricity. Greener fuels, such as biodiesel, are being made with soybeans.

Robots and Indoor Farms

When it comes to eco-friendly investing, another area of potential growth connects to the food we eat. Market observers identify both indoor farming and the use of robotics as significant, in terms of financial opportunity and the ability to improve agricultural quality.

For example, Iron Ox uses hydroponics to grow crops directly in water without soil, reducing water waste. Since it operates indoors, crops can be grown at any time, regardless of season. Iron Ox also uses two autonomous robots, named Grover and Phil, which constantly check plants, scan for issues, and adjust things like water level.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22042201