Early 2016 brings lots of positive news on ESG investing
Happy New Year! During the bustle of the holidays, you might have missed some positive news on ESG investing that was released in early 2016.
The Wall Street Journal said “Sustainable Investing Goes Mainstream.” MSCI talked about how a softening economy, long-term shift to a low carbon economy, generational changeover and institutional forces play a role in “2016 ESG Trends to Watch.” Forbes talked about how “opportunities abound for ESG and corporate financial performance.”
To underline what’s going on in the mainstream media with ESG investing, the Journal of Sustainable Finance & Investment just released an in-depth article citing evidence from more than 2000 empirical studies on ESG and financial performance. The study’s authors determined there is a clear business case for ESG investing, and ESG outperformance opportunities exist in many areas of the market (in particular, North America, emerging markets, and in nonequity asset classes.)
The main conclusion of the study is:
“The orientation toward longterm responsible investing should be important for all kinds of rational investors in order to fulfill their fiduciary duties and may better align investors’ interests with the broader objectives of society. This requires a detailed and profound understanding of how to integrate ESG criteria into investment processes in order to harvest the full potential of value-enhancing ESG factors. A key area for future research is to better understand the interaction of different ESG criteria in portfolios and the relevance of specific ESG sub-criteria for CFP. These insights will shed further light on the ESG determinants for long-term positive performance impacts.”
The start of 2016 brought a lot of encouraging news for the future of ESG—to ensure you’re ready for the increased attention to ESG this year and beyond, take the Root360 assessment at www.root360.org.