In 1758, the Religious Society of Friends, commonly known as Quakers, prohibited its members from participating in the lucrative slave market, which at that time traded human lives between the old continent and the colonies of the New World. Without knowing it, they had just planted the seed of what is now known as socially responsible investment: the one that incorporates ethical, social and environmental criteria into the decision-making process, complementing the traditional financial criteria.
In the same way that the Quakers gave up making money at the cost of a mercantile activity that undermined ethical and social values, many investors nowadays take into account environmental, social and good governance factors (ESG) when it comes to financing companies.
These investments support the promotion of business activities focused on the care of the environment, protection of human rights and diversity and customer or consumer satisfaction, among others.
Similarly, socially responsible investors introduce exclusion criteria when it comes to selecting the companies in which they are going to invest. That is, they do not trade in the arms industry, tobacco, alcohol, gambling, pornography, production of fossil fuels and many other examples that could represent activities that may violate the ESG criteria.
What are the ESG criteria (environmental, social and good governance)?
The ESG criteria are the main indicators used by investors to measure responsible management and the contribution to sustainable development by companies.
In the case of the environmental criterion, the investors value that the companies take measures in the analysis of the carbon footprint, the consumption of the natural resources, protection of the biodiversity, use of renewable energies, etc.
In terms of social criterion, aspects such as the defense of human rights both inside and outside the company, the ethnic, cultural and religious diversity of workers or child labor are some of the concepts where socially responsible investors focus.
Finally, the criterion of good governance is responsible of regulating the responsibility of the management of the company: the structure of the board of directors, the relationship with its employees, shareholders and other stakeholders, benefit sharing ...
300 billion investment worldwide
Today, the global figures for these responsible funds reach 300 billion euros (322 billion dollars), being Europe, with France, the United Kingdom, Switzerland, Belgium and Germany first, the most active market.
Precisely in the old continent the investment has increased from about 15 billion euros in 2000 to the current 100 billion, representing 2% of the continent's investment funds.