Environmental, social, and governance (ESG)
Funds using one or more sustainable investing strategies control well over $13 trillion AUM. Having a corporate ESG strategy is an essential best practice and opens access to the large and fast growing pool of ESG capital. Providing transparency, including ESG data on corporate websites, is the first step for investors seeking to assess risks and long-term investment opportunities based on companies’ performance in underlying areas such as diversity and inclusion, climate change and executive compensation.
“Companies with high ESG ratings (environmental, social and governance) tend to outperform. Companies with rising ESG ratings do even better. ESG allows investors to focus capital on less risky companies, which if done consistently, can help those funds to outperform over the long-run. ”
ESG Reporting strategy
Investors are seeking relevant ESG data and analytics to help better inform decisions. Given the lack of consistent reporting standards among ESG rating agencies, companies that proactively provide disclosure on environmental, social, and governance metrics have a clear competitive advantage in the fight for investment dollars.
“There’s a common perception among investors that putting money into companies that promote sustainability on issues like climate change or corporate governance is ‘the right thing to do.’ Research from the International Monetary Fund (IMF) suggests these investments can also pay off.”