ESG Investing - A Promise to Sustainability or Just Another Label?

ESG?encompasses Environmental, Social and Corporate Governance, and it pretty much equals to the sustainable development idea. In a world where people are more aware of environment friendliness and corporate social responsibilities, ESG is now trending: About 88% public companies, and two thirds of private ones have placed some kind of ESG initiatives in operation. Financial industry is no exception. Banking, insurance, securities, trust, forex and crypto, you have to be socially responsible as long as you are actively engaged in the system, for it is a critical part to drive global sustainability. ESG Investing, is how the idea manifests itself in the financial world.

ESG Investing: It Helps You Prosper, And Threatens You with Risks Too

The increasing number of financial services institutions such as FX/CFDs brokers and banks dabbling into the ESG game is hardly an oblivious fact over the years. Since 2022, based on Fazzaco's incomplete statistics, firms like?Credit Suisse,?DBS,?BNY Mellon,?Morgan Stanley,?IG Group,?Vanguard, and?Swissquote, all have either launched their own ESG funds, solutions or announced partnership with others to carry out ESG programs; or established a dedicated ESG team etc. In September 2022, the?online broker eToro?declared that it introduced ESG scores for over 2,700 stocks on its platform,?enabling users to consider environmental, social, and governance factors when building their portfolios.?The addition followed and was based on the partnering with ESG Book, a data provider.?CMC Invest, too, started to display ESG data for stocks, exchange-traded funds (ETFs) and investment trusts in its mobile investing app.

They are not alone, as several fintechs were stepping into the game as well, who whipped out kaleidoscopic solutions. Among them there are?Temenos,?GoldenSource, and?Apex Group, to name a few. By the end of 2022, the sheer scale of global ESG investing has reached a staggering $2.5 trillion, of which 83% came from the European region, where people are the most environmentally conscious, and the amount of ESG investing flowing into the European financial market in the fourth quarter of 2022 alone was $40 billion.

However, while ESG promotes financial?prosperity and benefits brokers, it also has its dark side, risks. In 2022, Fazzaco saw many brokers receiving?fines from regulators.?In November, for example,?the US SEC fined Goldman Sachs $4 million for its ESG failures. Meanwhile, we also saw compliance tech companies working with brokers to alleviate the risks, including?Broadridge?and?Fenergo.Read More Here