Why renewable energy investments are surging

Why renewable energy investments are surging

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Divestment campaigns were effective in influencing company practices-find out more here.

Sustainable investment is increasingly becoming popular. Socially responsible investment is a broad-brush term which you can use to cover anything from divestment from companies regarded as doing harm, to limiting investment that do quantifiable good impact investing. Take, fossil fuel businesses, divestment campaigns have effectively pressured most of them to reassess their business techniques and invest in renewable energy sources. Indeed, international investors like Ras Al Khaimah based Haider Ali Khan or Ras Al Khaimah based Benoy Kurien would probably contend that even philanthropy becomes more effective and meaningful if investors do not need to reverse harm in their investment management. Having said that, impact investing is a vibrant branch of sustainable investing that goes beyond avoiding harm to looking for quantifiable positive outcomes. Investments in social enterprises that concentrate on training, healthcare, or poverty alleviation have direct and lasting impact on communities in need. Such novel ideas are gaining traction particularly among young investors. The rationale is directing money towards investments and businesses that address critical social and environmental problems while creating solid financial returns.

There are a number 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 monetary results. For example, in one of the influential papers about this topic, the writer highlights that companies that implement sustainable practices are more likely to invite long haul investments. Also, they cite many instances of remarkable growth of ESG focused investment funds and the increasing number of institutional investors integrating ESG factors in their stock portfolios.

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 tens of thousands of sources to rank businesses. They discovered that non favourable press on past incidents have actually heightened understanding and encouraged responsible investing. Certainly, very good example when a couple of years ago, a renowned automotive brand faced a backlash due to its manipulation of emission data. The event received extensive news attention causing investors to reassess their portfolios and divest from the company. This pressured the automaker to make significant changes to its practices, namely by embracing an honest approach and earnestly apply sustainability measures. Nonetheless, many criticised it as the actions had been only driven by non-favourable press, they suggest that businesses should really be rather emphasising good news, that is to say, responsible investing must be seen as a lucrative endeavor not simply a necessity. Championing renewable energy, comprehensive hiring and ethical supply management should encourage investment decisions from a revenue perspective as well as an ethical one.