In an era where sustainability and ethical responsibility are shaping global markets, ESG (Environmental, Social, and Governance) investing has become more than just a trend—it is a necessity. Setareh Heshmat, a leading ESG investor and Director of ESG Investments at a prominent Singapore-based venture capital firm, shares her insights on the evolving landscape of ESG investing and the challenges of balancing profitability with purpose.

The Growing Influence of ESG Investing

According to Setareh, ESG investing is no longer a niche concept but a fundamental pillar of modern finance. “Investors and businesses are beginning to recognize that sustainability is not just about ethics—it’s also about long-term resilience and profitability,” she explains. Companies that integrate ESG principles into their operations tend to outperform their peers in terms of risk management, stakeholder trust, and long-term financial returns.

Key Trends Shaping ESG Investing

1. Regulatory Push for Sustainability
   Governments worldwide are enforcing stricter ESG reporting requirements, compelling companies to be more transparent about their environmental and social impact. “Regulation is a game-changer,” Setareh notes. “It ensures accountability and levels the playing field.”

2. Rise of Green Technology and Climate Tech Startups
   From renewable energy solutions to carbon capture technologies, investors are increasingly funding businesses that offer sustainable innovations. “Climate tech is one of the fastest-growing sectors in venture capital today,” Setareh highlights.

3. ESG Data and AI-Driven Investment Decisions
   As AI and big data analytics evolve, investors have better tools to assess ESG metrics and identify high-impact investment opportunities. “Data-driven insights allow us to move beyond greenwashing and invest in companies with genuine ESG commitment,” Setareh states.

The Profit vs. Purpose Dilemma

Despite the rise of ESG investing, one of the biggest challenges remains the balance between financial returns and ethical responsibility. Setareh acknowledges this tension: “Many investors still hesitate to prioritize ESG because they fear it may compromise profitability. But the reality is, ESG-conscious companies are more future-proof against regulatory risks, market shifts, and consumer demands.”

She believes the key is a strategic approach that integrates ESG without compromising financial goals. “It’s not about choosing between impact and profit—it’s about ensuring that the two go hand in hand,” she says.

What’s Next for ESG Investing?

Looking ahead, Setareh foresees an evolution in ESG investing driven by innovation, regulation, and shifting investor mindsets. “We’re moving towards a world where ESG will be embedded into every investment decision,” she predicts. “Investors who fail to adapt will be left behind.”

She also emphasizes the importance of mentorship and education in building the next generation of ESG leaders. “We need to equip young investors and entrepreneurs with the right knowledge to drive meaningful change,” she says.

Final Thoughts

For Setareh Heshmat, ESG investing is more than just a professional pursuit—it’s a mission. “Sustainability and profitability should not be opposing forces,” she concludes. “They should work together to create a better, more resilient financial future.”

As ESG investing continues to evolve, Setareh remains at the forefront, championing responsible investments that drive both financial success and positive global impact.