Sustainability, ESG, and the Future of Investment: A Review

Posted in: Best, Driver Price, Economy, Equity Investment, Future States, Performance Measurement and Evaluation, Philosophy, Portfolio Management, Risk Management, Standards, Ethics and Regulations (SER)

To mark Entrepreneurial investors’On the 10th anniversary, we have compiled previews of our coverage of the most important issues in finance and investment over the past decade.

Over the last 10 years, there has been a steady increase in investment management towards sustainability and embracing environmental, social and governance (ESG) issues in financial analysis.

Since its launch in 2011. Entrepreneurial investors This has tracked trends and provided critical insights into the development of investment sustainability structures for investment professionals.

ESG investment has existed in one form or another for most of the last 75 years, yet it has only reached a critical level in the last decade.

This development reflects a confluence of factors. Chief among them is the high demand from end investors – including institutional property owners and retail investors – for investment products and solutions that consider ESG risks and opportunities. Investors have also expressed a desire for investment that is consistent with specific environmental or social goals so-called non-economic objectives. Governments and regulators have put enormous pressure on the investment industry to contribute to sustainability-based policy goals.

Together, these factors have led to rapid growth in the development of ESG-related financial products. The following chart of Generation Investment Management Sustainable Trends Report 2021 Explains this pattern:

Sustainable-Related Finance Trends, 2015-2020

Sustainability-Related Money, 2015-2020 Trend Chart
Source: CB Insights; Bloomberg; BNEF; Reuters; FTSE Russell; Generation

ESG coverage on Entrepreneurial investors Basically reflects these developments. From NoLaunched in the fall of 2011, a total of 220 ESG-related articles have been published, three-quarters of them since 2016. These posts address all sorts of ESG issues, including Accounting and Disclosure Standards, Trusted Responsibility Debates, Relationship ESG and Investment Performance, Thematic Investments, Water Quality and Human Rights Issues, Gender Lens Investments and more.

ESG-Focus article from Entrepreneurial investors, By year

Chart describing ESG-focused articles on enterprise investor, by year
Source: Entrepreneurial investors

A selection of the most relevant insights and thought-provoking commentary on the ESG on all topics during this period. We demonstrate key sustainability issues through the perspectives of both ESG proponents and critics. The collection provides an interesting window into the ESG debate and draws readers to the emerging sustainability trends and its implications for the future of the investment.

The ESG is a framework for maintaining financial discipline

Kevin Prall, CFA, outlines a structural basis for analyzing how ESG affects indeterminate asset value creation and discusses how focusing on indomitable asset creation can bring more financial discipline to ESG investments.

ESG Matters: Global Trends and Transitions

Alain Reichenberg Gustafson, CFA and Barbara Stewart, CFA, discuss the growing importance and sustainability of women in the investment ecosystem, emphasizing the Nordic perspective.

ESG Performance Paradox

Jordan N.

Tile for the future of sustainability in investment management

Thematic Investment: Thematically Wrong?

Nicholas Rabena compares its performance with thematic investment qualities and established criteria. He concludes, “ESG and similar themes are forms of investment based on personal preferences. They may come at a cost, but they achieve some non-financial purpose.

ESG Debate Heats Up: Four More Challenges

What are the major areas of concern in the ESG world? Christopher K. Marker, PhD, examines the challenges around CFA, standards, green washing in investment products and the urgency of climate change.

ESG Investment: Can you take your cake and eat it too?

Do companies with higher ESG ratings outperform their lower-ranking counterparts? Gautam Dhingra, PhD, CFA and Christopher J. Olson, CFA, shared their analysis.

ESG Investing: Too Good to Be True?

The idea that companies that care about the environment, care for their employees and do better than good governance is probably a mirage, said Nicholas Ravener.

Outside of carbon: water risk and sustainable investment

CFA’s Monica Freeman said the water crisis in Cape Town, South Africa, shows that carbon emissions and climate change are not the only sustainability threats. Water concerns already affect investors ’bottom lines and also the future risks of their top lines.

Financial Analyst Journal Current Issue Tile

Human Rights Issues and Your Portfolio: Risks and Opportunities

What are the risks and opportunities associated with integrating or failing to address human rights issues in terms of resource allocation? Anjali Pradhan, CFA, investigates the matter.

Sustainable investment and fiduciary responsibility: Conflict or mating?

Usman Hayat, CFA, interviews David Blood, co-founder of Generation Investment Management, who surveys sustainable investment trends and discusses why sustainability is an integral part of the fiduciary duty.

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All posts are the author’s opinion. As such, they should not be construed as investment advice, or the opinions expressed must not reflect the views of the CFA Institute or the author’s employer.

Photo Credit: © Getty Images / Bloomberg Creative

Professional education for CFA Institute members

Members of the CFA Institute have the ability to earn self-assessment and self-reporting professional education (PL) credit, including content Entrepreneurial investors. Members can easily record credit using their online PL tracker.

Rodrigo Press, CFA

Rodrigo Press, CFA, Head of Industrial Research at the CFA Institute. He is responsible for building and maintaining global research functions at the CFA Institute, including planning, coordinating and creating research content for the CFA Institute Platform, including Future of Finance, CFA Institute Research Foundation, Financial Analyst. Pris previously served as head of the capital market policy EMEA at the CFA Institute, where he was responsible for capital market policy activities in Europe, the Middle East and Africa. Pres is a former member of the Group of Economic Advisers of the European Securities and Markets Authority (ESMA) Committee of Economic and Markets Analysis (2014-2018). Prior to joining the CFA Institute, Price was a manager at PricewaterhouseCoopers LLP where he specialized in investment funds.

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