Investing For Good – My time learning about Environmental, Social and Governance Investing

Samir Esmail – PLLC Scholar and Finance Major

As a finance major at the University of Alberta, the term ESG is shockingly hard to come by, and the value from including it is usually overlooked in investment classes. When first put into this situation of studying ESG principles, I couldn’t imagine the scale of how big ESG was in financial investing around the world. After just a month of working at Qube Investment Management, I have now grown to see value in a stock far from just the equity valuation equations that any finance textbook can teach you.

As stated previously, school does very little to prepare you for the work required to research and score companies based on an ESG criteria. Unlike proper quantitative formula techniques that are drilled into your head on the first day of Finance 301, ESG involves researching a company based on their environmental, social and governance standards. As a result, this research requires a far more in-depth investigation into a specific company or organization to find detail not readily available to the public. Additionally, ESG scoring involves giving attention to a wide range of sub-categories within each section. This can include anything from climate change concerns, proxy access at general meetings, and legal/regulatory compliance. Consequently, ESG analysts are required to dive deep into a variety of different matters to draw inferences and conclusions about the company in question.

The fact of the matter is, companies make it really hard to find dirt on them and it is even harder for someone who is remote to the company to get good insights on how ethical a company is. As a result, the work that I am doing is giving people inside analysis on a company’s ESG standing without the need for them to spend countless hours doing the research themselves. By doing this, financial analysists can take that information and assess whether or not to invest in a company that is far more reaching then just looking at a company’s profits.

Additionally, I have also worked on updating a course and a presentation designed to teach other analysts about the importance of ESG work. It is my hope that the contributions that I made to this course will encourage more businesses and people to invest in socially responsible businesses.

When I originally was put on to do these ESG scores, I was at first reluctant to see the overall societal benefit of ESG research. Now more than a month into my ESG scoring, I have a newfound appreciation for ESG principles and shareholder advocacy. I firmly believe that public shareholders are one of the strongest institutions that can hold companies accountable to society. At the end of the day, the more research and public disclosure we have, the more information people can use to make informed decisions about a company. If more people start to hold companies to an ESG criteria, I am optimistic that it will encourage companies to live up to a higher environmental, social and governance standard to maintain shareholders confidence and customer retention now and in the future. Although my work is by no means perfect, I hope that the ESG score which I am working on can help encourage people and companies to make better and more decisions about what actions to take so that we all can benefit.

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