Baker McKenzie: Companies striving for sustainable operation represent an increasingly advantageous investment opportunity

By: Trademagazin Date: 2022. 09. 01. 09:04

EU legislation can give investors an additional incentive to more often give preference to companies and businesses that operate transparently and according to sustainable principles. In order to preserve the stability of the value of an investment, before the transaction, it is advisable to review how transparent the target company is and to what extent it actually meets the ESG requirements, with the help of a suitable professional background – warns the Baker McKenzie law firm.

Companies that perform well in the field of ESG are ranked first

The ESG framework helps companies (including, in particular, companies that want to sell or plan to bring in additional investors) to organize their operations more consciously and transparently. This approach can help favor long-term investments in companies that are committed to ensuring sustainable operations.

With the Taxonomy Regulation, the European Union took serious steps towards ensuring that environmental protection (e.g. combating climate change, energy efficiency aspects), social effects (e.g. the position of employees, diversity, inclusiveness) and good corporate governance (e.g. prioritizing environmental protection aspects by the owners’) aspects should come to the fore as much as possible when making investment decisions. In addition to the EU legislation, thanks to the increasingly significant application of ESG aspects, even before the outbreak of the war, it was observed that some investors gradually reduced their exposure in sectors less suitable for ESG indicators – for example, arms production, the sale of alcohol products, gambling, the tobacco industry, and the nuclear industry in the field of energy – while, as a result of an opposite process, some solar companies were rated higher than ten-year-old oil companies based on the same criteria.

Baker McKenzie