A new ESG paradigm in the making?

ESG investing does not operate in a silo. It is continuously evolving, with consequential events accelerating this progress. The Paris agreement, for example, led to an acceleration of green debt supply, while the Covid-19 pandemic emphasised the S in ESG.

A few areas have been in particular focus:

  • Evolution of exclusionary policies: should these mostly focus on economic activities or also add countries to the list of exclusion criteria? And, to what extent should subsidiaries or minority shareholdings be included?
  • Definition of clean energy: should a more inclusive approach be taken with regards to nuclear energy (thereby also helping more countries become energy independent more quickly)?
  • Social impact of activities: to what extent should investors have a more nuanced view around weapons and the defence industry? Is this industry purely socially negative, or can its existence be seen as a necessity to ensure that other SDGs can be achieved?

It is unlikely that we will see sudden conversions on any of these topics. However, the events in the Ukraine highlight that companies need to be continuously attentive to the changing times and ready to shape and reshape their ESG positioning accordingly.

Supporting Sources:

Thanks to Saakshi Arora for undertaking the research for this article.

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