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Environmental and social governance are factors that gain influence in the investment industry.
In the past two years ESG investing had grown by more than a third to $30+ trillion. Today over a quarter of the world’s professionally managed assets undergo various forms of ESG screening.
ESG is now becoming a mainstream trend. Every institutional investor — from pension funds to endowments to sovereign wealth funds — faces a unique mix of forces pushing or pulling him to ESG investing. Be it the EU Action Plan for Financing Sustainable Growth, the OECD Guidelines for Multinational Enterprises (OECD MNE Guideline) for the financial sector, a growing body of policies or softer factors like the United Nations Sustainable Development Goals. Also more and more investors are asking for innovation combined with a circular economy.
As institutions try to respond to these competing forces — without compromising their risk–return requirements — they must chart their own course in applying ESG. This means finding the best-fit approach to incorporating ESG factors into their investment process and balancing cost pressures with the need to build up specialist knowledge. We as specialized external advisor with a scientific approach (see our sustainable finance science series (link)) are here to help you design and implement your ESG process consistently.
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