Recent studies show ESG implementation in mainstream finance has improved significantly, presenting opportunities for sustainable, long-term returns.

By Paul A. Davies and Michael D. Green

In recent years, Environmental, Social and Governance (ESG) implementation has transformed from a niche to mainstream activity, as asset managers, asset owners, and pension funds increasingly recognize the importance of ESG factors to investors, stakeholders, and shareholders. Issues such as climate change, remuneration, modern slavery, and equal pay have led to the integration of ESG into investment processes.

Incorporating ESG Factors and Metrics

The Principles of Responsible Investment (PRI) describe “responsible investing” as an approach to integrating ESG factors, which are not traditionally part of financial analysis, into investment and decision-making processes to better manage risk and generate sustainable, long-term returns.