ESG-driven portfolios can thus offer investors diversified exposure across sectors and geographies since these identify companies that could otherwise be passed over through regular analysis. Here, renewable energy, sustainable agriculture, and new-fangled technology firms are very popular ESG investments opening up entirely new sectors with high growth potential.
ESG has indeed been seen as a drag on returns. However, recent evidence reveals the opposite: companies that performed well on ESG-related issues tend to be on top of their game and have good financial performances, too. In this case, ESG-driven investment can lead to long-run capital appreciation and support sustainable growth through the choice of financially performing responsible companies.