With the popularization and deepening of the concept of sustainable development, ESG investment has become a major trend in the capital market. Investors are increasingly focusing on the environmental, social, and governance performance of businesses to achieve long-term sustainable returns.

What is ESG investment?
ESG investment, also known as responsible investment, refers to an investment philosophy that incorporates environmental, social, and governance factors into the investment decision-making process. Unlike traditional investment methods that solely pursue economic benefits, ESG investment focuses more on a company's performance in sustainable development.

Advantages and Challenges

Advantage
Long term returns: Research shows that companies with high ESG performance often have higher investment returns and lower risks in the long term.
Risk control: By incorporating ESG factors into investment decisions, investment risks can be more comprehensively identified and managed.
Social impact: ESG investments can drive companies to achieve positive changes in the environment and society, thereby having a greater positive impact on society.

Challenge
Data Transparency: There are significant differences in the transparency and standards of ESG data disclosure among different companies, which poses certain challenges for investors.
Inconsistent standards: Currently, there are multiple ESG evaluation standards and methods in the market, lacking unified norms, making cross enterprise and cross industry comparisons complex.
Long term perspective: ESG investments often require a longer-term perspective, which is a major challenge for investors who are accustomed to short-term returns.

ESG investment strategy
Negative screening: Exclude companies that violate or do not meet specific ESG standards, such as tobacco, weapons, and other industries.
Active screening: Select companies that are leading in ESG performance for investment.
Shareholder activism: Actively engaging in dialogue with businesses to drive improvements in ESG aspects.