PHOENIX - TelAve -- Making investment decisions by focusing on issues beyond balance sheets, income statements, and other measurable metrics has become a major issue in the finance world. However, the ESG (Environmental, Social, and Governance) movement aims to incorporate other factors.

Those who favor ESG factors as part of the investment decision-making process argue that it produces better investment returns over time, as companies with higher ESG scores have superior investment returns.

On the other hand, those who cast a skeptical eye on ESG measures are focused on the traditional metrics of a balance sheet, income statements, and absolute and relative valuation to determine if the stock or bonds of a particular company represent an attractive investment opportunity.

ESG 101: How It Works

Incorporating ESG into the investment decision-making process is a recent phenomenon. Traditionally, financial professionals will evaluate a potential investment based on financial analysis, relative valuation, and estimates of the entity's future growth.

More on TelAve News

• Introducing MyTennisTrip.com: Your Ultimate Tennis Travel Companion
• Award-Winning Writer Thrills Mystery Lovers with The Button Collector on September 17
• Tobu Railway Group's Tobu Kogyo Division Has Renovated the Kotoku Cattle Farm in Nikko National Park and Reopened it as of July 1, 2024
• Mytee Products' Big Move: More Space Equals Exciting New Products
• Alice's Lullaby Set for an October 8, 2024, Launch

The philosophy behind ESG is based on the belief that choosing investments/companies with higher ESG scores will produce superior investment returns in the long run. However, because ESG investing is still relatively new, measuring these factors and assigning scores to different companies remains debatable.

Moreover, the process becomes even more difficult as determining an ESG score for a particular company is subjective. Therefore, the ability to quantify most ESG measures is complex and fraught with pitfalls.

"One of the risks of using ESG factors in the investment selection process is that management takes their eye off the ball, and the company's fortunes suffer as a result," said Sterling Russell, CFA at Trajan Wealth, LLC.

What The Future May Hold for ESG

Based on broad support for using ESG factors in decision-making, it is likely here to stay. However, ESG factors will likely evolve over time as more data becomes available.

In the interim, a continued focus on fundamental analysis —balance sheets, income statements, relative valuations, and projections of future performance—will dominate the investment process.

More on TelAve News

• Webinar Announcement: Creative Methods for Tracing Assets
• NEMTAC Announces New Board of Directors Officers for 2024-2025
• Dehy Mills Welcomes Two New Board Members to Support Future Growth
• Stars of Netflix's 'Skywalkers:A Love Story' Scale World's Tallest Bridge Inspired by $DOGS Community
• CCHR: "Family Estrangement" Used to Detain and Abuse Children in Psych Hospitals

About Trajan Wealth

Trajan Wealth, LLC, formed in 2012, was founded by CEO Jeff Junior. Before his 20+ years in the financial services profession, Jeff Junior was a United States Marine Corps member. Jeff continues to serve his clients and employees with the utmost service, respect, and attention to detail. The firm has multiple locations in Arizona, Texas, and Utah.

For more information on all the different services offered or to schedule a complimentary consultation, visit https://trajanwealth.com or call 1-800-838-3079.

Disclaimer:

* Advisory services offered through Trajan® Wealth L.L.C., an SEC registered investment advisor. Legal services are offered through ​Trajan® Estate, L.L.C. ​in Arizona and Utah, and independent law firms in other states.