What is one of the ESG benefits for investors?

Investors who prioritize Environmental, Social, and Governance (ESG) criteria often benefit from risk mitigation. By incorporating ESG factors into their investment strategies, these investors can identify and manage potential risks that may affect their portfolio. For instance, focusing on environmentally sustainable practices can help mitigate risks associated with regulatory changes or environmental liabilities. Additionally, companies that prioritize ESG standards tend to be better equipped to handle social and governance challenges, which can lead to enhanced reputation and long-term financial performance. This proactive approach allows investors to avoid or lessen the impact of negative events, ultimately contributing to more stable and sustainable returns.

In contrast, options like higher marketing costs and increased operational complexity are generally viewed as drawbacks rather than benefits, as they can impede the efficiency and financial performance of investments. A decreased market presence could suggest that a company is not effectively communicating its value or engaging with stakeholders, which is contrary to the objectives of a robust ESG strategy.