Socially responsible and “sustainable” investing is picking up in popularity across retail and institutional investors alike. According to Wikipedia, “[i]n less than 20 years, the ESG movement has grown from a corporate social responsibility initiative launched by the United Nations into a global phenomenon representing more than US$30 trillion in assets under management.”
When it comes to cannabis though, implementing environmental, social, and (corporate) governance (“ESG”) initiatives may be very difficult to pull off. This could be an issue for future investors looking for more environmentally and socially conscious industries in the U.S. (and even abroad).
If you’re new to the concept, ESG is a scored evaluation of a company’s awareness around various environmental and social/cultural issues when it comes to how it governs itself internally and does business externally. Usually, intangible assets of the business help make up a company’s ESG score, which can seriously increase its future valuations. These intangible assets may include a company’s corporate culture, attention to environmental and social initiatives like climate change and human rights, employee treatment and relations, educational programs around diversity, support of consumer protection, etc.
NerdWallet lays out nicely, into a few categories, your typical ESG factors for companies to consider