Sustainable Trading: How ESG Trends Influence Forex Markets

Discover how ESG news on environmental, social, and governance sustainability can offer new earning opportunities for your trading activity!

Environmental, social, and governance (ESG) factors can impact various market dynamics, suggesting alternative strategies for beginner and intermediate traders and thus opening the door to new earning opportunities.

But what do we mean by ESG factors? We will find out in this article, where we will examine how ESG data can influence currencies and prices and why it may be important to choose a broker that offers sustainable investment choices. Additionally, we will discover how strategies that incorporate ESG characteristics combine with STIC Cashback’s Forex rebate programmes.

The Importance of ESG News in Forex

The acronym ESG (Environmental, Social and Governance) refers to those aspects related to the sustainability of political decisions, commercial choices, and investments, with reference to themes such as the environment, climate, social well-being, workplace safety, or the governance policies of companies and institutions.

Viewed favourably by both the public and investors, choices in line with ESG factors often translate into variations in the value of a currency that, if “anticipated” by the trader, can be monetised through trasactions in the appropriate currency pairs.

For this reason, especially for beginner traders, it is important to immediately learn the cause-and-effect relationships brought about by decisions concerning ESG aspects.

Consider, for example, policies on carbon and other fossil fuels, which can influence the value of a particular currency and suggest opening trading positions in certain directions, depending on the stability of that currency.

An example of the importance of knowing ESG news is given by the recent decision of the Canadian Prime Minister to abolish the  carbon tax, which penalised the use of fossil fuels. A decision made by a political representative who had based his election campaign precisely on themes in favour of environmental sustainability! A bit unexpected, right? Yet, the coherence of this choice lies in the fact that, although originating from laudable intentions, the legislative measure proved completely ineffective, also in light of the recent tariff policies decided by the USA.

Well, learning to immediately recognise a relevant news item in terms of ESG factors can put the beginner or intermediate trader in an advantageous position, allowing them to anticipate market trends and identify important earning opportunities. The news reported above, for example, offers the opportunity to operate on currency pairs between the Canadian dollar (CAD) and other currencies, such as the Euro, to exploit theresulting  trends.

Forex Trading: How to Earn with ESG Trends

An excellent way to always keep ESG trends under control is to keep up with the news and communications from the main ESG rating agencies worldwide, such as Moody’s and Bloomberg, to always be informed, for example, about the climate policies of the main countries or the trend in carbon prices, which heavily influence the currencies most linked to commodities.

But it is not only environmental sustainability indices that characterise ESG trends in Forex. As mentioned, particular events, such as social unrest or labour policies on employment or workplace safety, can also trigger new market trends.

It is precisely on this kind of news that carry trade movements are based, characterised by the convenience, for investors, of borrowing the currency of countries with low interest rates, in order to make investments in countries that ensure a significant and low-risk return.

And the same applies, even more so, to governance factors, both at the level of institutions and large companies: greater or lesser political transparency, the level of corruption, and fiscal indices influence governance scores, determining particular ESG trends that offer new profit opportunities for novice traders. The important thing is to know how to take advantage of  momentum, anticipating the variations in price and value trends before others.

STIC Cashback: Forex Rebate and ESG-Based Trading Strategies

At this point, it is clear that knowledge of ESG updates and news in Forex must play a prominent role in every trader’s activities. The gradual updates of the Paris Agreement on global warming, the annual reports on the EU Green Deal, the labour policies of large countries: news of this kind is an inexhaustible source of earning opportunities, and knowing how to refine one’s Forex strategies in relation to ESG trends is one of the secrets to success in trading.

Furthermore, every trader has the opportunity to do something concrete in terms of sustainability by choosing a broker that has obtained ESG accreditation (such as B Corp or ISO 14001 certifications), thus demonstrating their social commitment.

And, in this regard, there are more than a few ESG brokers who suggest and incentivise investments in stocks and products of companies that adopt sustainable practices.

In any case, there is no better strategy than combining the right investment with the opportunity to obtain periodic Forex rebates on the volume of trades carried out, such as those offered by STIC Cashback.

STIC Cashback is the weekly rebate programme that allows you to optimise the management of your budget: in fact, the amount of the STIC Cashback Forex rebate is proportional to the volume of transactions carried out.

Find out now how to sign up for the STIC Cashback programme and plan your next transactions on ESG trends: earning with Forex has never been so easy!