What is ESG investing?

ESG is a branch of investing that focuses on being more socially conscious and responsible. It aims to maximise Environmental, Social, & Governance outcomes.

With growing climate and environmental consciousness,  investors have tuned into the pulse of this movement. This form of investment takes into consideration the environment and society alongside the economy. The underlying belief is that such considerations further the growth of firms financially. As corporate social responsibility continues to gain prominence, so does investor awareness regarding ethical participation. 

Our advisers looked at the three components of ESG and what each involves. These are the criteria based on which you can align investing with ESG:

ESG investing


The impact that a company has on the environment.

This includes:

  • The company’s carbon footprint
  • Waste management
  • Production process 
  • The life of the product

The higher its disregard for environmental concerns, the worse the company’s sustainability is; this is not only from an environmental perspective but also for the firm’s survival.

Social workplace


A company must be socially attuned in terms of:

  • Diversity of its workforce
  • Elimination of discrimination
  • Safety and well-being of employees.

An additional positive indicator is if the company spearheads social change via campaigns, social drives, or other means. Some companies even make social messaging a part of their corporate communications and marketing. All of these point toward a sensitivity toward their customers and society at large.

Governance in workplace


It is widely acknowledged that change comes from the top, that is, any positive shift in an organisation must flow from its management and heads. These are the people who determine the agenda and vision of the company. If this level is not willing to engage with real contemporary concerns, it is unlikely that the same will become part of their workplace. Top-level leadership must listen and respond to changing times with regard to their stakeholders in whichever form they may be: employees, customers, shareholders, etc.

ESG Ratings

There exist many research firms working on rating companies for their ESG scores.

To compare different investments, they have a well-defined and objective metric. Not every ESG aspect has equal weightage; after all, no company can give equal importance to every criterion. Some may be closer to their goals and missions or more aligned with contemporary world events, so it naturally makes more sense to focus on them.

Each ESG component is rated based on multiple criteria. Research firms usually look at:

  • Annual reports
  • Management of resources
  • Finances
  • Employees
  • Sustainability measure

The higher the score in a particular aspect, the better the company’s performance in that area. These ratings help a company make strategic decisions for improvement. Some firms that provide these ratings include

ESG Investing

If what you’ve read so far has got you interested and willing to dip your toes into the world of ESG investing, there are two main ways to go about it.

  • One is that you can do your own research. You may be new to investing or a veteran, but there is abundant literature on ESG to get your hands on. The skeletal framework is identifying your motivations and finding companies whose social interests align with your own. Whether you want to pursue individual stocks or funds, options are available. ESG-targeted funds tend to have a higher cost of investing. 
  • We will always recommend working with financial advisers. Hoxton Capital Management steps into the picture here. With a high-level view of your portfolio, we can tailor ESG investments to meet your criteria and goals. Relieving you of the burden of data crunching and research, our team ensures the fulfilment of your values and financial aspirations while remaining ethically conscious. Transparent functioning also means that you know the rigorous screening that goes into selecting the best funds for you without any hidden costs.

For more information on ESG investing and to talk to one of our investment specialists, get in touch today.

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