6 TRENDS TO WATCH
1. SHARING IS CARING
There has been a gradual push for more reporting and transparency by companies of their ESG
impact and strategies for sustainability. This push for ESG-related disclosure requirements is mainly coming from responsible investors and is supported by regulators, and there is a strong preference for public disclosure.
PSSST: Companies in the US – where there are no mandatory disclosure requirements – will be competing for capital with companies in emerging economies that have better ESG disclosure. Over the long-term, this should help indicate the consequences of transparency and accountability one way or another.
2. CLIMATE CHANGE CLIMBS UP THE TO-DO LIST
Many companies are now working to update their climate and carbon reduction goals, which end in 2020. And there’s a movement leading the charge for the “Just Transition” to a low-carbon economy. The call is for investors and governments is to focus on the societal impact of climate change: ensuring that the communities and workers are not left behind as the economy and businesses adapt in response to climate change.
3. BIG DATA, BETTER UNDERSTANDING
The “big data” revolution has reached the stage where we’re looking at how investors can make sense of all the data and extract the most relevant signals. As we look out onto the next decade, gaining ESG data will be the easy part. The important and more challenging part will be knowing how to apply the most relevant metrics to provide increasingly relevant ratings and research.
4. WASTE NOT WANT NOT
More and more companies (and investors) are realising that sustainability issues like waste reduction (not just management) are a business imperative today. Various countries are getting serious about waste reduction regulations…
5. DO THE RIGHT THING
Corporate culture and ethics is a theme investors are expected to vigorously pursue going forward. From consumer privacy and data breaches for technology companies to the treatment of labour in supply chains, these issues are being looked at with a closer lens.
6. GREENER PASTURES
Globally, many leading asset managers have introduced designated sustainable products and making the shift to “greener” portfolios continues to be at the forefront of investors’ concerns.
PSSST: Amundi, Europe’s biggest asset manager and one of the biggest in the world by AUM, has pledged to fully screen for ESG in 100% of its investments by 2021.