Brendan McDermid/Reuters
- ESG investing - which focuses on environmental, social, and governence factors - is becoming increasingly important for investors and companies.
- A new analysis by Bank of America Merrill Lynch takes a deep dive into ESG and shows the positives it offers for companies and people investing in the stock market.
- Here are the top 10 reasons to keep ESG investing in mind, according to BAML.
- Read more on Business Insider.
Investing in environment, social, and governance factors - or ESG - is a growing trend that's sparked both interest and debate.
Many investors are growing increasingly aware of ESG and want to use their money for good. In turn, this has put extra pressure on companies to make sure that they adhere to ESG standards in their ranks.
"Our conversations with clients reveal a split between believers and skeptics," analysts at the Bank of America Merrill Lynch wrote in a note Monday. "We can relate to the skeptics, as we too were unconvinced before we embarked on our research into these attributes," they wrote.
But the devil is in the data details, the analysts wrote. BAML analysis of ESG investing revealed that inflows into ESG strategies over the next few decades could rival the size of the S&P 500 today, a significant amount of money. This all lends credence to the idea that it's not merely another Wall Street fad.
"We see sticking power," the analysts wrote.
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Results from BAML's Global Wealth and Investment Management survey showed that 67% of financial advisors have clients that have expressed interest in ESG factors. High-net worth investors, millennial investors, and women are the three groups that have the highest interest in ESG investing.
In addition, BAML shows that ESG has been a positive for companies and investors that have embraced the principles. It's consistently been a solid indicator of company health, and has also translated into significant returns that outperform peers.
Here are the top 10 reasons that investors and companies should care about ESG, according to BAML.