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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.

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James Flippin ABOUT James Flippin James Flippin is the son of a financial advisor who grew up hearing and learning about bond yields, interest rates, the stock market, and the ins and outs of Wall Street. After stints as a licensing and business broker for Marcus and Millichap in New York City, James moved into broadcasting and became a reporter and anchor. He covered crime, politics, finance, and tech at NBC News Radio while working part-time as a producer for SiriusXM. James graduated from the University of Delaware with a bachelor’s degree in political science and economics. He's also an accomplished podcaster with over 10-years of experience.

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