The need for “mental health” ESG standards

Here’s an excerpt from this piece by Gayathiri Sri Rangan at Index One:

On one hand, reinforcing tighter ESG regulations is an important step in encouraging investment in industries like mental health, but on the other hand, advisers and investors still struggle with matching specific ethics and beliefs to their investment range.

One potential solution for investors looking to invest in brain and mental health is to decide for themselves which companies or industries they personally feel are causing these issues within themselves and their communities. Investors should be able to construct an index that is true and specific to them and their beliefs.

The lack of ESG standards, as well as the prescribed standards in the investing space has limited investors and advisers, not allowing portfolios to clearly reflect personal ESG values and objectives.

With the increasing adoption of custom indexing in the investment space, it seems like a feasible option for financial advisors and investors to look into building indices that reflect names of companies that make sense to them, so that there is more control over the set of rules applied to the index methodology, and subsequently, the investment itself. Index providers are also becoming more flexible by allowing users to enter new data sources such as survey and medical data. This allows users to utilize this data with ease in their index creation, therefore ensuring a diverse portfolio that reflects the true objectives of investors.