The path towards integrating environmental, social and governance (ESG) aspects in the agenda of institutional investors and companies seems to be complex and confusing. We believe the main reason for this is that, so far, institutional investors and companies alike are struggling to accept ESG as a driver for long-term value creation. Many still seem to regard ESG as a moral obligation; resulting in box ticking, not in higher quality investments.
In many countries, including the Netherlands, focus on ESG is considered to be an integral part of business, as well as a responsibility for investors. It is included in several corporate governance codes and investor codes, such as the UK’s Stewardship Code. In the Netherlands Eumedion, the representative of institutional investors, has issued best practices on engaged shareholdership, stipulating for example for ESG to be integrated into engagement with listed companies. It’s time pension funds and other institutional investors calibrate their compass.
When measuring sustainability, one size won’t fit all. That’s one of the conclusions of a recent Corporate Responsibility symposium organized in Amsterdam by the Green Place on the application of Environmental, Social and Governance (ESG) sustainability criteria to investments. The event brought together asset managers, asset owners, regulators, analysts and CSR managers to discuss “Mainstreaming ESG: Creating a winning formula for the triple bottom line”.
Many companies around the world have discovered they can benefit financially from integrating environmental, social and governance (ESG) targets into their daily operations and strategy. At the same time, institutional investors are more aware of their roles as responsible shareholders after the devastation left behind by the credit crisis. Some of them have taken up the challenge to create a civil economy, in which they act as engaged shareowners for all the world citizens who have money in a pension or mutual fund or life insurance.