ESG Investing For Dummies

Book description

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

Product information

  • Title: ESG Investing For Dummies
  • Author(s): Brendan Bradley
  • Release date: April 2021
  • Publisher(s): For Dummies
  • ISBN: 9781119771098