What ESG Means
ESG stands for environmental, social, and governance. It is used, by investors, to keep their stock portfolios as socially responsible as possible. It is used to provide investors with high returns, but also to benefit society as a whole.
What Companies Are Included in ESG?
ESG covers a wide range of companies and different social issues. The criteria for a company to meet to fall under ESG is simple. They must do these few things.
- Pay employees well
- Ethical Practices
- Environmentally Friendly
- Healthy Workplace
In order to meet this criteria, the companies management must prove that it cares about the company and shareholders investment. This also includes being socialy acceptable of everyone and having a diverse workforce.
What ESG Does NOT Do
ESG does not state or not, if a company is a good investment. It simply states if a company is good for the community and if they treat their employees, and the environment, correctly. Although, the investor still has to research the company in order to figure out if the company is still a good investment.
How ESG Applies To Real Estate
ESG typically is used for stocks but can absolutely be applied to real estate. Although, ESG cannot be applied to all properties when it comes to real estate there are a few ways you can apply it.
How to Apply ESG to Your Properties
It is easy to apply ESG to almost any property you own. An example of this would be switching out old appliances for more power efficient ones. Investors can also invest in properties that help society or already have green initiatives in place.
Crowdfunding and Investment Properties
Crowdfunding is an easy way to boost returns but can be a-lot more difficult to judge from an ESG standpoint of investing. It requires a lot more investigating and digging into the company than usual. Investment Properties is just when an investor puts money into the properties they currently own to make them apart of ESG.