ESG Investing: Focusing On Significant Business Sector Shifts

Environmental, social, and governance (ESG)-related issues have impacted different business sectors in more or less dramatic ways, and as governments, companies, and their stakeholders increase their engagement with these concerns, traditional industries seem to be staging significant transformations.

But which industry sectors have faced, and continue to experience material changes? And how have ESG-related concerns influenced the economies in which certain companies operate, as well as their financial performance?

These are critical questions when performing fundamental assessments and require an analysis of massive amounts of variables to factor into investment decision-making.

Industries undergoing material shifts in their business practices, amid heightened concerns about ESG-related issues, include forest products, energy, transportation, dairy, healthcare, and several others.

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Business Sector Analysis by “E”, “S” and “G”

Each of the three main umbrella themes that comprise ESG – environmental, social and governance – may have varying degrees of importance when considering a company’s operations, polices, standard business practices, and capital deployment – as well as, ultimately, its financial performance.

Under ESG, a company whose revenues rely on cutting down trees to produce wood-based products, or one that produces fossil fuels, for example, will likely face more environmental scrutiny, while healthcare, food manufacturers, and entertainment companies will likely be assessed for their impacts on society. Meanwhile, while corporate-governance policies may be more pervasive across business sectors, they may be better addressed by some more than others.

Forestry and Wood Products

Taking a broad look at the forestry and wood products sector –

When you think about the kinds of products that come from trees, you may think about firms such as The International Paper Company (IP), or corrugated packaging company WestRock (WRK).

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Learn more about how ESG-related issues have been impacting other financial market sectors, including energy, transportation, dairy, healthcare, and more, in our ...

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