ESG investing in 2021: Advancing data capture and impact measurement (Calvert)

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By John Streur, President and CEO of Calvert Research and Management

Adoption of environmental, social and governance (ESG) strategies by investors and corporations globally has risen significantly in recent years. Today, $17 trillion — or one of every three dollars professionally managed in the U.S. — is invested in sustainable investment strategies, according to the US SIF Foundation’s biennial Trends Report.

Promotion

We can see many companies changing their practices because they understand the importance of ESG to their brands and operations. The critical, imminent nature of many ESG challenges like climate change and inequality has become move evident today, and market competitive forces are driving innovation and change.

The dramatic shift toward ESG investing, however, will not be sustained unless we address a fundamental weakness in the market infrastructure, or framework, for capturing and reporting ESG data that is decision-useful to investors. Current information from issuers available to investors when making their ESG investment decisions is inadequate in its breadth, depth and quality. Regulators are lagging behind the needs of investors and have so far failed to create the necessary infrastructure. We expect regulators to attempt to catch up in 2021, but we believe the real progress will be made by leading market participants, who will shift the data paradigm from disclosure of ESG risk to analysis of the impacts that issuers have on people, society and the environment.

 

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