We’ll also be publishing five ‘sector spotlight’ pieces, taking a look at how ESG is impacting specific industries.
When ESG investing was first touted, investors were hesitant. Their focus was shareholder value, not environmental and social or corporate governance.
But we now know that ESG thinking – far from threatening financial performance – actually helps improve it.
Companies with strong ESG credentials consistently outperform those without, particularly in emerging markets.
According to finance company MSCI, ESG leaders on average outperformed by 14.4 per cent in emerging markets and 5.2 per cent in developed markets from June 2013 to February 2018.
To reap the benefits, businesses must carefully consider the different elements of ESG.
Put simply, environmental criteria include the energy and resources a company uses and the waste and carbon emissions it produces. Social factors look at how a company treats staff, suppliers and the communities in which it operates. Governance reviews the procedures behind corporate decisions and compliance, and the needs of all stakeholders.
Today, investors know ESG makes good business as well as moral sense, leading to sustainable markets and better outcomes for society.
The threat to the global economy and business if climate change is left unchecked in increasingly clear. Meanwhile the transition to a low-carbon society promises enormous growth potential for those ready to address the climate crisis.