Why does responsible investment matter?
Investors are increasingly giving greater weight to a company’s environmental, social and governance (ESG) performance when deciding whether to invest in that company.
According to a recent Goldman Sachs report: 'More capital is now focused on sustainable business models and the market is rewarding leaders and new entrants in a way that could scarcely have been predicted even 15 years ago.'
A recent survey on behalf of the United Nations Global Compact into the progress of its Principles for Responsible Investment (PRI) set of voluntary guidelines found that the world’s major investors are now actively integrating ESG issues into their investment policies and engagement strategies.
According to the survey, 88% of investment manager signatories to the PRI are conducting at least some shareholder engagement on ESG issues. The PRI initiative includes more than 200 institutional investors, representing more than USD 9 trillion in assets.
The current financial situation is leading investors to seek out more sustainable models of doing business. This is likely to lead to the assessment of ESG issues becoming one of the core criteria used by investors to inform their investment decisions. Companies are increasingly engaging with these issues and reporting on that engagement
There is evidence that responsible investors are less likely to sell their shares in a company once they have made the decision to invest. This is a benefit to companies as it reduces investor turnover.
