Bank of America Merrill Lynch found in 2018 that firms with a better ESG record than their peers produced higher three-year returns, were more likely to become high-quality stocks and less likely to have large price declines or go bankrupt.
However, study by NN Investment Partners1 showed that more than half of professional investors still think that incorporating ESG into their investment strategy will reduce their returns, with more than 70% thinking this in Italy and the Netherlands, along with 80% of German investors.
With almost all the indicators proving ESGs value, why is this yet to become the norm?
Our latest complimentary whitepaper, ‘Moving ESG into the Mainstream: Drivers and Actions’ explores the rise of ESG in Investments – you can download the content piece here.
Focused on European market trends, the whitepaper explores:
- The Value of ESG analysis – exploring the expected returns from factoring in ESG and the, often, detrimental costs of failing to do so
- Asset Owners driving change – how asset owners are utilising ESG to shape the investment landscape, beyond just ‘ethical investing’ to the norm
- Growing Pressure from government and citizens – how investors are pressured both top down and bottom up, whether it’s regulatory action or public protests
- Addressing risks – tackling not some but every possibility, ensuring assets do not left stranded and reputations tarnished
- New tools for measuring ESG – beyond the talk into data led reporting on how corporates and investors can demonstrate their ESG credentials
Considering ESG factors is “a way to measure externalities,” Christian Heller, CEO of the Value Balancing Alliance, whose members aim to create a standardized model for measuring and disclosing the environmental, human, social and financial value companies provide to society. “It’s a way to extend risk management because at some point the externalities will be internalised, for example through carbon taxes.”