Integrating environmental, social and governance (ESG) criteria into investment decisions can lead to more responsible portfolio choices.
Considering the environment and governance issues that are key to sustainable investment should be integral to investment choices. The breadth of criteria can range from targeting reduced CO2 emissions to biodiversity, waste and water management; from safeguarding against human rights abuses to diversity; and from supply chain management to treatment of staff.
In recent years, investors have had a growing appetite for information that captures the environmental and social factors of companies they invest in. Driven by the demand from investors, who are increasingly taking environmental and social factors into account when making investment decisions, companies are increasingly being required to report comprehensively on these topics. The inclusion of such issues in financial reporting is deemed to be a double-edged sword as it carries both benefits as well as risks, marking a challenge for stakeholders: how to optimise relevant and balanced disclosures without burdening companies with overly burdensome reporting requirements.
Examine your company's operations and governance; does your organisation help to integrate ESG factors into the portfolio? If not, what are some ways you can bring forth solutions to tackle these issues?
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