What is ESG investing, and why should you consider it?

What is ESG investing – and why should you consider it?

You’ve likely heard about ESG (which stands for Environmental, Social and Governance) as it’s made its way further into the spotlight over the last few years – including in the investment space.

But what is ESG investing exactly, and why should you consider it as an investor? Read on to find out more – and see how Attivo can support you with ESG investment planning.

What is ESG investing? 

ESG investing looks at environmental, social and governance factors (more on those below) alongside financial considerations when you’re assessing different investment opportunities. However, it also much broader than this, and have also heard it referred to as socially responsible investing, sustainable investing, impact investing or values-based investing.

Environmental factors 

Environmental factors refer to an organisation’s overall environmental performance and stewardship, including how they measure and manage environmental risks, protect the environment and support sustainability.

This could include measures such as carbon footprint, greenhouse gas emissions and energy sourcing/consumption, as well as activities like office recycling, EV car schemes for employees, and volunteering opportunities for environmental causes (such as tree planting).

Social factors 

Social factors encompass human rights and equity – or, how an organisation manages its employee, supplier and customer relationships, and how their policies and activities affect those individuals.

This can range from working conditions and health and safety standards to diversity, equality and inclusion (DEI) and philanthropic activities.

Governance factors 

Governance focuses on an organisation’s leadership, structure and practices, such as board diversity, structure and pay, avoidance of bribery and corruption, and management and culture.

Governance stipulates that an organisation’s activities and decision making should be fair, transparent, and aligned with long‑term sustainability and stakeholder trust. It also focuses on those in leadership roles being held accountable for their actions and decisions.

Why should you consider ESG investing, if not already? 

1. Aligning your investments with your personal values 

ESG investing means you can align your investments that are supporting your lifestyle financial planning journey with your personal values. For example, if you are passionate about tackling climate change, you could choose to invest in a renewable energy business. Or, if you want to back fair labour practices and human rights, you might choose to invest in a company that directly supports those movements.

In fact, there is an entire spectrum of investment options you can consider, from philanthropic to a finance-first approach and everything in between:

ESG investing doesn’t necessarily mean you are sacrificing returns. While it may be a different journey to a traditional investment, Attivo’s Financial Planners can help you to align those that sit best with your values and objectives (more on that later on).

2. Reduce your long-term risks

Investing always carries some level of risk; from market volatility to inflation and liquidity risk.

At the same time, global events (such as wars, pandemics and natural disasters) and company-specific occurrences (like poor health and safety standards or environmentally damaging activities) can also impact market volatility.

ESG investing, on the other hand, has been found to reduce the impact of these risks by helping investors avoid investing in organisations and areas that are affected by those factors.

3. Have a positive impact on the world 

For those who are keen to have a positive impact on the world around them, ESG investments can be a powerful way to encourage better behaviour from companies – as well as avoiding the worst offenders.

In fact, research shows that when investors actively engage with businesses on important environmental, social and governance issues, it can lead to higher standards and fewer harmful practices, particularly around climate action and good governance.

What can you do to enhance ESG in your current investment portfolio?

It’s important to review your investments regularly to ensure they are appropriately aligned to meet your lifestyle goals and objectives – which, if needs be, can also include a review of ESG factors.

When assessing an organisation that you currently invest, you may wish to look at how exposed the organisation is to material environmental risks, how it manages people, products and supply chains, and whether governance structures support effective oversight and accountability.

Research shows that ESG information is most useful when it focuses on financially material issues, is forward‑looking, and provides credible evidence of risk management and resilience rather than generic sustainability claims.

How can Attivo help? 

ESG investing can mean different things to different people; from avoiding certain industries to supporting climate action, social change or responsible corporate behaviour from others.

This is why, at Attivo, we’ll always begin by understanding who you are and your personal values, priorities and expectations, alongside your financial objectives.

In terms of your ESG preferences and impact goals, we’ll look at:

• The environmental, social or governance issues that are most important to you.
• Whether you prefer exclusion‑based investing, ESG integration, active ownership or impact‑focused approaches.
• Your risk appetite in pursuit of investments and sustainability outcomes.

We also know that there is no one-size-fits-all solution when it comes to ESG investing. Our independent status means we have access to a carefully-researched panel of responsible and ESG‑aware investment solutions – all of which are selected through ongoing due diligence by our Proposition team.

In short, we’ll help you align your investments with their values by understanding your sustainability priorities, explaining the different ESG approaches available, and recommending well‑researched solutions that balance long‑term your financial goals with environmental, social and governance considerations.

References

Allianz Global Investors (2025) ESG investing and risk reduction. Allianz Economic Research. Available at: https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/economic-research/publications/specials/en/2025/april/2025-04-29-ESG.pdf (Accessed: 5 February 2026).

Barkó, T., Cremers, M. and Renneboog, L. (2024) ‘Shareholder engagement on environmental, social, and governance performance’, Review of Finance, 28(2), pp. 483–529. Available at: https://academic.oup.com/rof/article/28/2/483/7288195 (Accessed: 5 February 2026).

Friede, G., Busch, T. and Bassen, A. (2022) ‘ESG and financial performance: Aggregated evidence from more than 2,000 empirical studies’, Journal of Sustainable Finance & Investment. Available at: https://www.sciencedirect.com/science/article/pii/S221484502200103X (Accessed: 5 February 2026).

Harvard Business School (2020) The impact of ESG disclosure and forward‑looking information. Working Paper No. 20‑056. Available at: https://www.hbs.edu/ris/Publication%20Files/20-056_1c21f28a-12c1-4be6-94eb-020f0bc32971.pdf (Accessed: 5 February 2026).

Khan, M., Serafeim, G. and Yoon, A. (2016) Corporate sustainability: First evidence on materiality. Harvard Business School. Available at: https://dash.harvard.edu/bitstreams/7312037d-76e5-6bd4-e053-0100007fdf3b/download (Accessed: 5 February 2026).

McKinsey & Company (2020) Consumers care about sustainability – and back it up with their wallets. Available at: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/consumers-care-about-sustainability-and-back-it-up-with-their-wallets (Accessed: 5 February 2026).

Sustainability Accounting Standards Board (SASB) (n.d.) Investor use of sustainability information. Available at: https://sasb.ifrs.org/investor-use/ (Accessed: 5 February 2026).

This article is provided for information purposes only and does not constitute a personal recommendation. Any decision to invest should be made in the context of your individual circumstances and financial objectives. The value of investments and any income from them can fall as well as rise, and you may get back less than you invest.