Responsible Equity Investing – can it pay to play nice?

Nick Henderson explores the growing demand for financial decisions to reflect ESG considerations.

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Equity investing may remain in vogue for some time yet – but how the industry invests is changing. There is growing demand for financial decisions to reflect environmental, social and governance (ESG) considerations. Traditionally a trend driven by personal values, there is now increasing momentum from a regulatory perspective. Last year, the EU regulator introduced mandatory disclosure by asset managers and advisers of their sustainability policies[1]. Asset managers are implementing investment policies and products that include appropriately disclosed ESG criteria, often linking these to the UN Sustainable Development Goals (SDGs) – 17 global goals designed as a blueprint for a more sustainable world by 2030.

Another driver of increased demand is the growing consideration that aligning investment decisions with ESG issues doesn’t necessarily mean compromising on performance; in fact, it can mean quite the opposite. Don’t just take our word for it – a review of over 200 academic papers found that 88% showed a link from good ESG practices to good business performance[2].


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