What is ESG Investing?

ESG Environmental

ESG Investing is a category of investing which refers to the integration of three key factors Environmental, Social and Governance into the behavior of a business. ESG investing was initiated in 2004 by Kofi Annan, the former UN Secretary-General, when he wrote a letter to the CEOs of major financial institutions asking them to take part in an initiative to find better ways to integrate ESG into capital markets.  Since then, there are have been numerous reports highlighting that ESG factors are relevant for financial valuation, and participating in ESG investing has risen swiftly and become a $12 trillion industry.

Corporate leaders today are being pressured to improve sustainability practices in material ways that both benefit their firms’ bottom line and create global impact. The result is that ESG has become mainstream and companies are increasingly creating ESG goals and strategies. However, the definition of ESG is so broad and so subjective, leaving too much ambiguity and inconsistency in the methodology. Many companies are working hard to establish standards and mapping, but this is an evolution and a very long-term approach.

Monarch Private Capital offers investment opportunities that address ESG factors that provide a quantifiable impact. For example, cutting global carbon emissions through tax equity investments in renewable energy projects is a quantitative environmental metric. Similarly, tax equity investments in affordable housing is a quantitative social metric. Both of these demonstrate how much a company is committed to global ESG issues.

If you are interested in learning more about how tax equity plays into ESG, please contact us today.