IN RECENT YEARS, investors have become increasingly dissatisfied with the ESG [environmental, social, governance] risk information they receive from businesses. Our research shows that 86 per cent of institutional investors believe companies with strong ESG performance will feel a significant and direct impact on analyst recommendations. More broadly, 90 per cent cite that since the pandemic started, they attach greater importance to ESG performance when it comes to their investment strategy and decision-making. And yet, 51 per cent believe there’s a lack of information about how companies create long-term value (LTV).
Case in point: Ahead of the 2020 proxy season, State Street Global sent an open letter to boards saying it would incorporate performance measures of a company’s business operations and governance related to financial material and sector-specific ESG issues into its engagement and voting priorities. By October 2020, it had followed through, voting against directors at 64 per cent of meetings where it saw room for improvement in a company’s ESG response. A similar commitment to sustainability features prominently within BlackRock’s refreshed investing standards. In the firm’s 2021 letter to CEOs, it reaffirmed climate as an investment risk that it would rigorously address through its decisions.
These are examples of a broader movement. The unites 128 global asset managers that are committed to supporting the goal of net-zero greenhouse gas (GHG) emissions by 2050. They represent over US$43 trillion in assets under management—and they’re not alone. The United Nations-convened shows united investor action to align the more than US$10 trillion in their portfolios with a 1.5C scenario (tied to Article 2.1c of the Paris Agreement). Investor-led has taken a similar stance, working to ensure the world’s largest GHG
