Last week stocks posted losses for the holiday-shortened trading week as the first-quarter earnings season kicked off. The next few weeks are the heart of earnings season, and we’ll get a look at whether high inflation is cutting into corporate profit margins.
A remarkable trend currently exploding is the number of corporations discussing ESG (environmental, social, and governance factors) on their earnings call. ESG factors and investing isn’t just about aligning with holistic and sustainable values or being liberal. It also looks at how well a business is positioned to overcome ESG risks and take advantage of ESG opportunities. Companies that have a strategy including ESG factors may be at an advantage when the next oil, climate, or social crises occurs. This is a relatively new focus for corporations and over the next few years we should begin to see if these corporations generate higher profits or outperform during volatile times.
I’m continuously monitoring ESG investing and researching how to optimize their use in client portfolios. Contact me if you would like to discuss how ESG can diversify a portfolio or if you want to compare your current portfolio holdings to those of an ESG focused portfolio.
Graph from FACTSET Earning Insight Report
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