Here's how companies factor in environmental, social and corporate governance concerns

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Impact investing incorporates environmental, social and governance. Here's a look at how these factors fit into the analytical process, and how they add value.

"Investors are always looking at bond proceeds, but they also want to know where exactly their money is going and 'Can you find the data regarding overall long-term impacts of the bond?'" she said.

"People buy [them] for preservation of principle, tax-exemption purposes and safety," she added. "But beyond that, muni bonds are the original impact investment instruments.The challenges of ESG The world could ultimately be rewarding companies for better behavior and better stewardship of these important risks."The harder problem is what to do with this data," Platt added. "Not all ESG factors help stock performance."

Just as asset managers need to be educated about ESG factors, so do advisor clients. And the value-add goes beyond financial returns, according to Jay Lipman, co-founder and president of Ethic, a technology platform and sustainable asset manager. His company provides educational materials, for both advisors and their clients, which illustrate 19 ESG categories, each with sub-categories .

 

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