2. ESG may mean sacrificing returns: lower returns or higher risk
When you limit your investment options and pay more to include your ESG factors, you may give up on some investment return as you narrow the field that can provide you with returns. Many have written on why this kind of sustainable investing can feel like a money pit because the funds you favor can underperform compared to others that are less socially responsible and perhaps less risky, too.
Take time to do your ESG research and find companies that not only align with your values, but have the best returns, as there may now be more than one option to choose from if you spend time researching upfront before you invest.
3. Slightly higher fees
You may have to pay a little more in management fees for some ESG funds, which can also eat into your earnings. That’s because ESG funds require managers to do research and they’re often working with a smaller asset base, so you may pay more to be in their funds.
But, as one study showed, 66% of people around the globe are willing to pay more for sustainable goods. That number jumped to 73% with millennials. It’s always smart to focus on performance, but if you’re doing your research, you may discount the extra cost knowing that you’re investing in a higher cause.
4. No reporting requirements
While there are different analytic firms that can rate stocks on the socially responsible scale, the biggest pitfall these days in the ESG investment process is that there are no standards or ESG ratings to measure these funds’ performance. So, they can market themselves as good for the environment, but they may not be, and if you start comparing companies, it may feel like apples and oranges. You don’t have a way to tell because there are no reporting requirements and what is self-reported isn’t consistent across industries or companies since there is no universal standard.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
