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Uploaded by CaseyP on May 16, 2019

Business investments are affected by a wide range of factors. Before a company undertakes any investment activity, it must first understand the prevailing environment. In this case, it must comprehend the demography, politics, climate, and social and cultural dynamics. The aim of analyzing the environment is to ensure that business decisions are uniquely tailored for that type of an environment (Kular, 2017). Every market has unique characteristics and a business which is able to recognize these traits and utilize them in operations is likely to compete effectively. Developed markets and emerging markets exhibit different traits. Companies in emerging markets may not compete at the same level with those in developed economies following the traditional investment models (Authers, 2018). Thus, the adoption of the ESG (environmental, social, and governance) model gives businesses in the emerging markets a somewhat similar competitive platform with those in developed markets.
Today emerging economies offer multiple business investment opportunities. The adoption of the environmental, social, and governance (ESG) approach is particularly a superior approach embraced by businesses to boost their sustainability. ESG refers to the three core factors in the measurement of sustainability and ethical impact of business investments (Authers, 2018). In recent years, emerging economies have been hit by market volatility and political disruptions as well as unstable interest rates in developed countries like the U.S., thus, with some much uncertainty in the traditional markets, companies in the emerging markets have opted to invest in ethical, social, and corporate governance. ESG investing is also viewed as a parameter to encourage cultural shift towards corporate governance transparency. Businesses in emerging markets are trying to attract potential investors using openness and transparency. Similarly, environmental sustainability is a trending issue that has attracted the adoption of ESG investing. Investors are looking for sustainable businesses, hence the significance of ESG investing. Organizations with poor environmental management policies may be fined for regulatory breaches, those with poor social practices may experience high staff turnover and labor-related problems, and entities with poor governance framework may not attract potential investors (, n.d.). Basically, ESG is a modern day model for business operations in emerging markets.
The predominant aspect considered in making decisions related to financial assets was the financial returns. However, there were other criteria such as political, social, and environmental elements considered. In the 1950s and 60s, there was an opportunity for trade unions to consider social environments in their capital...

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Uploaded by:   CaseyP

Date:   05/16/2019

Category:   Finance & Investing

Length:   15 pages (3,391 words)

Views:   14

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