Sustainability and ESG Funds in 2023
There is an increasing demand from investors for Environmental, Social, and Governance (ESG) and Socially Responsible Investing (SRI) products. An increased need for sustainable investing, and less volatile performance of ESG-funds in both stocks and bonds than non-ESG funds in turbulent markets*, motivate investors to focus on the strategic impacts of companies ESG responsibility on shareholder value over the long-term.
Investors seek companies’ accountability and investments’ outcomes. Organizations with poor corporate sustainability disclosures may be seen as risky investment options.
The ESG disclosure standards used by companies have gained investors and regulators attention over the years. The Global Reporting Initiative (GRI)** was established in 1997 in response to an increased need for an internationally accepted set of sustainability reporting standards. GRI provides the world’s most widely used sustainability reporting frameworks.
According to Bloomberg, ESG assets are set to reach over $50 trillion by 2025***, representing more than a third of global assets under management. To improve the selection process for these assets, investors should consider the likely material environmental, social and governance factors affecting companies in 2023.
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* What the last few years taught us about ESG & market volatility (gobyinc.com)
**GRI - Home (globalreporting.org)