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Your guide to investing for a more sustainable world 

Investing in one’s own future has always been a good financial move. But what if you want to ensure that the companies you have a financial interest in are also helping to improve the present and future of all of us—and of the planet? More than ever before, sustainable investors want to be confident that a company’s Environmental (net zero emissions target), Social (response to the Covid-19 pandemic), and Governance (no repeats of Enron and WorldCom) policies and actions are positively impacting the global outlook—and to identify ways that their dollar can incentivize business leaders to do even better. The worldwide rise of an Environmental, Socially Responsible, and Governance (ESG) approach to investing shows you’re not alone, and the $30+ trillion—and growing—committed in this way says it’s already become a transformative global movement. ESG provides a framework for evaluating companies that, unlike unrelated investment strategies, informs and guides sustainable investment. 

Even if you’re a novice investor, ESG For Dummies will allow you to hit this new investing landscape running, providing you with measurable ways to factor ESG into company performance, see how these are reflected in your investment return, and show how you can monitor companies to ensure your money is being put to ethical use. You’ll also become familiar with the big names to follow in the ESG world, how they’re already effecting positive change, and how you can help. 

  • Identify the drivers for each category of ESG 
  • Define and measure material ESG factors for investing success 
  • Understand principles for building a diversified sustainable portfolio 
  • Recognize material ESG factors effect on company performance 

ESG investing introduces powerful tools to do real and lasting good: this book shows you how to use them to help make everyone’s future, including your own, much more secure.  

 

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Introduction
    1. About This Book
    2. Foolish Assumptions
    3. Icons Used in This Book
    4. Beyond the Book
    5. Where to Go from Here
  5. Part 1: Getting to Know ESG
    1. Chapter 1: Entering the World of ESG Investing
    2. Surveying the Current ESG Landscape
    3. Exploring What ESG Is (and Isn’t)
    4. Understanding ESG’s Impact on the Environment, Society, and Governance
    5. Using International Standards to Determine ESG Objectives
    6. Chapter 2: Back to the Future: Understanding the Evolution and Growth of ESG Investing
    7. Studying the Evolution of Investing in ESG
    8. Exploring the “Personality” of an ESG Company
    9. Understanding Why ESG Is Important
    10. Surveying Specific ESG Ratings and Metrics
    11. Defining an ESG Policy
    12. Chapter 3: Give Me an ‘E’! Defining the Environmental Sector in ESG
    13. Outlining a Company’s Use of Natural Resources
    14. Studying the Effects of a Company’s Operations on the Environment
    15. Defining “Green” for a Company
    16. Detailing a Company’s Performance as a Steward of the Physical Environment
    17. Chapter 4: Give Me an ‘S’! Investigating the Social Aspects of ESG
    18. Identifying Factors in a Company’s Social Performance
    19. Evaluating a Company’s Social Performance
    20. Determining Measurements for Social Performance
    21. Deciding on Weight Factors
    22. Chapter 5: Give Me a ‘G’! Decoding the Governance Component of ESG
    23. The Good Place: Defining What “Good” Corporate Governance Looks Like
    24. Walk the Walk: Evaluating a Company’s Governance Values
    25. Lead the Way: Emphasizing How ‘G’ Can Dictate the ‘E’ and ‘S’ Factors
    26. Around the World: Underlining Regional Differences in Governance Activities
    27. Chapter 6: Highlighting Corporate Greenwashing
    28. The Grass Isn’t Always Greener: The Basics of Greenwashing
    29. Just When You Thought It Was Safe: Coronawashing
  6. Part 2: Investing in ESG through Different Instruments
    1. Chapter 7: Approaches to ESG Investing
    2. Understanding Socially Responsible Investing
    3. Evaluating Impact Investing
    4. Focusing on Faith-Based Investing
    5. Chapter 8: Analyzing Equity-Based Instruments
    6. Integrating ESG Strategies into Investment Decisions
    7. Verifying Quantitative Strategies
    8. Identifying Smart Beta Strategies
    9. Focusing on a Given Theme
    10. Chapter 9: ESG and Fixed Income Instruments
    11. Analyzing Fixed Income (Bond) Factors
    12. Emphasizing Bond Issuer Differences
    13. Highlighting Fixed Income Indexes
    14. Identifying Specific ESG Exposures
    15. Chapter 10: Exploring Derivative and Alternative Instruments
    16. Achieving Passive Returns Using ESG Indexes
    17. Increasing Focus on ESG in Alternative Assets
    18. Focusing on Illiquid Assets
    19. Investing in “Traditional” ESG
    20. Chapter 11: Highlighting Geographical Differences in ESG Investing
    21. The Beginning: Europe
    22. The Middle: North America
    23. The End: Developed versus Emerging Markets
  7. Part 3: Applying ESG Philosophy
    1. Chapter 12: Creating Value through ESG for Corporations
    2. Crystal Clear: Corporate Disclosure and Transparency
    3. Grow the Pie: Generating Enhanced Returns
    4. Roll Up, Roll Up: Attracting More Customers
    5. Pare It Back: Reducing Costs
    6. The Bottom Line: Increasing Productivity and Attracting Talent
    7. Chapter 13: Devising an ESG Policy
    8. Here’s a Great Idea: Creating a Plan
    9. Don’t Reinvent the Wheel: Undertaking a Peer Review
    10. Go Over It: Reviewing Your Core Investment Principles
    11. Familiarizing Yourself with ESG-Specific Regulations
    12. Surveying Reporting Requirements
    13. Examining ESG Engagement
    14. Chapter 14: Defining and Measuring ESG Performance and Reporting
    15. Defining Criteria and Metrics
    16. Calculating Relative ESG Performance
    17. Getting a Handle on Ratings and Rankings
    18. Developing Frameworks for Reporting
    19. Chapter 15: Elaborating the ESG Endgame
    20. Highlighting the Evolution of ESG from Niche to Mainstream Strategy
    21. Watching the Growing Use and Acceptance of ESG Standards
    22. Looking at the Increasing Impact of ESG Ratings and Rankings
    23. Improving Education
  8. Part 4: The Part of Tens
    1. Chapter 16: Ten Frequently Asked Questions for an ESG Approach
    2. What Is ESG Investing?
    3. Which Sustainability Goals Should Be Followed?
    4. What Are the Characteristics of an ESG Company?
    5. How Is an ESG Company Rated?
    6. What Investing Principles Should Be Adopted for ESG?
    7. What Is Stewardship?
    8. How Is an ESG Approach for Asset Owners Implemented?
    9. How Are Benchmarks and Performance Measurement Incorporated in ESG?
    10. What’s the Latest on Disclosures and Reporting?
    11. What’s the Future of ESG Investing?
    12. Chapter 17: Ten Issues Surrounding ESG Portfolio Construction
    13. Reasons for Varying ESG Scores between Rating Agencies
    14. Criteria Used in Creating a Combined ESG Score
    15. Trends Driving ESG Materiality
    16. Quantitative Approaches to ESG Analysis
    17. Qualitative Analysis: Verifying and Supplementing Quantitative Analysis
    18. ESG Regulations
    19. Risk and Reward
    20. Derivative and Alternative Instruments
    21. Stranded Assets
    22. Sustainable Investing
    23. Chapter 18: Ten Factors Influencing the Growth of ESG Investing
    24. Climate Change: The Route to Net Zero
    25. Environmental and Social Issues Coming to the Fore
    26. Stewardship as a Driver for Change
    27. ESG Disclosures
    28. Accounting
    29. Regulation and International Standards
    30. Impact Investing: Actively Do Good versus “Do No Harm”
    31. Data and Technology
    32. Consolidation of the ESG Ratings Companies
    33. Political Impacts: Geopolitics and Public Pressure
  9. Appendix: Great Resources for ESG Investing
    1. The Basics of Building a Retail ESG Portfolio
    2. Disclosure, Reporting, and Engagement
    3. Further Asset Class Information
  10. Index
  11. About the Author
  12. Advertisement Page
  13. Connect with Dummies
  14. End User License Agreement
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