The appetite for socially responsible investing has intensified over the past decade, with particular emphasis on environmental, social and governance ("ESG") factors. This trend has led wealth managers, broker-dealers and investment advisers to examine ESG factors of public companies through public filings and disclosures as an increasing number of retail investors are becoming more interested in ESG investments, including structured products linked to ESG-themed indices.
On December 11, 2019, FINRA published an article explaining how each ESG investment "is unique, and should be evaluated on its own terms." This type of investment uses a variety of ESG criteria in selecting specific investment components with the primary aim of generating competitive financial returns while enabling a positive impact on society. Positive impacts on the environment may include clean energy technology and water conservation; on society, the promotion of human rights, gender equality, fair labor standards and safe working conditions; and on governance, anti-bribery and corruption policies and board diversity.
FINRA reminded ESG investors to keep these tips in mind:
- Know one's investment goals and risk tolerance.
- Understand the ESG fund's investment criteria.
- Be alert to potential "green washing."
- Do a values check.
- Stay diversified.
- Be prepared for lack of "criteria consistency."
- Be on the lookout for "green" scams.
- Look beyond marketing materials.
- Know and compare fees.
Originally published in REVERSEinquiries: Volume 3, Issue
Click here to read the articles in this latest edition.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2019. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.