The reasons why renewable energy investments are on the rise

The reasons why renewable energy investments are on the rise

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Studies show a positive correlation between ESG commitments and financial revenues.

Responsible investing is no longer seen as a fringe approach but rather an important consideration for global 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. Certainly, a case in point when a few years ago, a famous automotive brand name encountered repercussion because of its adjustment of emission data. The incident received widespread media attention causing investors to reexamine their portfolios and divest from the business. This compelled the automaker to create big changes to its practices, namely by adopting an honest approach and earnestly apply sustainability measures. Nonetheless, many criticised it as its actions were only driven by non-favourable press, they argue that businesses must be alternatively concentrating on positive news, in other words, responsible investing must certainly be regarded as a profitable endeavor not only a necessity. Championing renewable energy, inclusive hiring and ethical supply administration should sway investment decisions from a profit making perspective in addition to an ethical one.

There are several of reports that supports the assertion that including ESG into investment decisions can enhance financial performance. These studies show a stable correlation between strong ESG commitments and monetary performance. For example, in one of the authoritative papers on this topic, the writer highlights that companies that implement sustainable methods are more likely to attract longterm investments. Also, they cite numerous instances of remarkable development of ESG focused investment funds and the raising number of institutional investors incorporating ESG factors to their portfolios.

Sustainable investment is rapidly becoming mainstream. Socially responsible investment is a broad-brush term which you can use to cover everything from divestment from businesses viewed as doing harm, to restricting investment that do measurable good effect investing. Take, fossil fuel businesses, divestment campaigns have successfully forced many of them to reassess their company practices and spend money on renewable energy sources. Indeed, international investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien may likely suggest that even philanthropy becomes much more effective and meaningful if investors need not undo harm in their investment management. Having said that, impact investing is a dynamic branch of sustainable investing that goes beyond fending off harm to seeking quantifiable positive outcomes. Investments in social enterprises that give attention to education, medical care, or poverty alleviation have direct and lasting impact on people in need of assistance. Such novel ideas are gaining traction especially among young wealthy investors. The rationale is directing capital towards investments and companies that tackle critical social and environmental problems while generating solid monetary profits.