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01 August 2023 09h30
Source: Banco Carregosa

ESG funds: what are they and what are their advantages?

ESG funds: what are they and what are their advantages?
Fundos ESG o que sao e quais as vantagens
 
 

ESG funds are managed with environmental, social and human values in mind, allowing you to invest in companies that focus on sustainability – in its various aspects. Find out what they are, what the advantages and risks are, and how to invest in them.


What are ESG funds?

ESG funds are investment funds whose assets have a strong commitment to sustainability. At a time of growing awareness of the need to protect the planet and communities, these funds favour companies with strong human and social values. However, companies with ESG standards continue, like any business, to aim for profitability. The difference lies in management based on the three main pillars that make up the ESG acronym:

 

E – Environmental

As the name suggests, environmental criteria are linked to certain business initiatives that positively affect the environment, among which are carbon footprint reduction, energy efficiency and waste management.
In fact, companies are one of the main sources of carbon emissions that aggravate the greenhouse effect, and are one of the main consumers of the planet's natural resources. Thus, one of the objectives of ESG funds is to encourage organisations to adopt good environmental practices, reducing the harmful effects of their activity on the environment. The more sustainable and transparent companies gain the market's trust, attract more investment and tend to perform better in the long term.

 

S – Social

The second letter of the ESG acronym stands for social responsibility and the optimisation of human capital. These companies actively promote social well-being, and may focus on health, education and maintaining a good relationship with the community through ethical and transparent business practices.
In addition, the companies selected in the ESG funds also seek the well-being of their employees, taking specific measures to ensure health, safety and equal opportunities. This criterion is intended to encourage the creation of positive organisational environments and the implementation of social practices with an impact on the community.

 

G – Governance

The last letter of the acronym refers, above all, to the way companies are managed, with a focus on quality, impartiality, fairness, transparency and accountability.
Anti-corruption administrative mechanisms are thus prioritised, which, on the one hand, prevent fraud and lobbying and, on the other, promote business ethics. The aim is to achieve excellence in administration, protecting shareholders' rights and reinforcing internal and external confidence.


 

What are the advantages and risks of investing in ESG funds?

The investment philosophy of ESG funds has won the preference of investors. Firstly, investors find companies committed to the global issues of the future, which makes their performance potential more promising over the long term. For example, consumption based on sustainability is growing, so companies that adapt to ESG criteria are better placed to progress in the market. In addition, ESG funds invest in companies that meet sustainability criteria across a range of sectors. ESG investments are based on the premise that the analysis of these investments and the management of the businesses in which they are invested incorporate into their decisions a weighting of risks of an E, S and G nature, thereby reducing the likelihood of unconsidered risks arising, for example, from climate change or socially irresponsible decisions. In addition, some investment strategies with ESG features also seek to actively contribute to improving the sustainability of human action in these three perspectives.
However, these advantages do not mean that investing in ESG funds is risk-free. As with any other type of investment, it is important to take into account the market's inherent fluctuations and to assess the level of risk in accordance with the objective and profile of each investor. Moreover, there are still no universal standards of what ESGs are, meaning that monitoring by each country may not be sufficient to guarantee compliance with the guidelines.

 

 

How to invest in ESG funds? 

To invest in ESG funds, the first step is to choose a trusted intermediary. Banco Carregosa has 180 years’ of solid experience in the international market and follows the attention given to investments in ESG funds. 
Through Banco Carregosa, you will find a set of Investment Funds that allow you to invest taking into account an ESG rating. You can use the filters of our fund searcher to determine a set of criteria that are relevant to your investments, among which the ESG rating.

You can also find on our website a selection of thematic investment funds made by the Investment Department of Banco Carregosa that offers high-potential exposure to companies committed to sustainability. 

 

BlackRock Sustainable Energy

The Fundo BlackRock Sustainable Energy brings together assets of companies dedicated to alternative energy, with a focus on clean energy, energy efficiency and sustainable mobility. These companies are at the forefront towards a carbon neutral economy, and the choice is underpinned by the fact that there is still vast untapped energy potential. 

 

Schroder Global Climate Change

The Schroder Global Climate Change Fund invests in several areas related to climate change, channelling capital to companies with the highest growth potential. Thus, this fund exposes investors to opportunities not yet identified by the markets.

 

Schroder Global Energy Transition

The Schroder Global Energy Transition Fund involves companies that are leading the clean energy sector, leaving out organisations linked to the areas of fossil fuels and nuclear energy. This fund aims to take advantage of paradigm shifts in the production, distribution and consumption of energy to achieve global environmental goals, which opens up a long-term sustainable investment dimension. 


 
 

Investing in ESG funds with Banco Carregosa

ESG funds prove that it is possible to invest in an ethical and sustainable way and achieve profitability. In fact, it is difficult to conceive a profitable long-term investment that does not embrace such important criteria as environmental, social and corporate. Therefore, our vision is that companies and investors should include, in the short term, environmental concerns in their values and operating principles.
In Banco Carregosa, we follow in real time the changes in the financial sector and put our resources at the service of clients to manage capital towards a more sustainable future for society. You can rely on Banco Carregosa as your specialised partner and invest with confidence.