20 Mar 2018

Gaining Investors' confidence

Morrow Sodali

Corporate Governance isn’t a trend, it has come to stay. This is confirmed by Morrow Sodali's 2018 Institutional Investors Survey, which reflects the growing interest of the investment community in corporate environmental, social and governance (ESG) practices. Along the same lines, the Global Sustainable Investment Alliance notes the growth of assets under management that integrate ESG criteria into their investment or divestment decision processes, increasing from $18 trillion dollars in 2014 to $23 trillion in 2016.

But why the growing interest of investors in ESG factors? The answer is simple: more and more information confirms that the analysis of environmental, social and governance factors can help increase the return on investments. This is supported by two recent studies, From “why” to “why not”: Sustainable investing as the new normal and Total Societal Impact. A new lens for strategy, elaborated by McKinsey and BCG respectively.

Among investors with an ESG profile, the exclusion of certain companies or sectors (tobacco, arms, etc.) continues to be a predominant strategy. However, the integration of ESG criteria into the main analysis and Engagement as a lever for value creation, are the next most widespread strategies. Of the three, Engagement is the one that has experienced the greatest relative growth in recent years as a formula for the consideration and analysis of ESG aspects in their investments.

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Topics

ESG Governance Shareholder Activism Shareholder Communication Shareholder Engagement Global