Investors Remain Committed to ESG Despite Political Opposition
Despite efforts by Republican legislators in the US to undermine ESG (environmental, social, and governance) practices, global investors and executives are confident that these efforts will ultimately fail. According to a survey by Bloomberg Intelligence, 89% of investors consider ESG metrics to be mainstream, and 57% believe that the "ESG" label should not be replaced despite the backlash. The survey also revealed that ESG is primarily used by businesses to improve profitability, competitiveness, and brand value. A significant majority of investors (85%) believe that ESG leads to better returns, resilient portfolios, and enhanced fundamental analysis. Executives surveyed (84%) stated that ESG helps shape a more robust corporate strategy.
While ESG fund flows have shown signs of cooling and some wind and solar investments have suffered due to higher interest rates and supply-chain issues, the survey findings highlight the continued commitment to ESG principles. Laws seeking to ban ESG practices are spreading across GOP-led US states, drawing warnings from Wall Street leaders. However, sustainable fund flows in Europe have remained resilient. Major investment firms like BlackRock are expanding their ESG business, with positive long-term flows and a significant increase in sustainable strategies managed on behalf of clients.
The survey also emphasized the role of ESG regulations and legislation in guiding corporate strategies and capital flows. While challenges such as data consistency and transition costs exist, investors view ESG as part of their fiduciary duty and expect better returns from ESG investments. The findings indicate that despite short-term geopolitical risks, long-term commitments to ESG remain intact.
ESG Commitment: A Key Consideration for New Businesses
Despite political opposition, primarily from Republican legislators in the US, the commitment to Environmental, Social, and Governance (ESG) practices among global investors and executives remains strong. This trend has significant implications for new businesses. According to a Bloomberg Intelligence survey, a majority of investors view ESG metrics as mainstream and integral to improving profitability, competitiveness, and brand value.
ESG and Business Strategy
The survey indicates that 84% of executives believe ESG helps shape a robust corporate strategy. For new businesses, this underscores the importance of integrating ESG principles into their strategic planning and operational processes.
Investor Expectations and ESG
Investors are increasingly viewing ESG as part of their fiduciary duty, expecting better returns from ESG investments. This expectation creates an imperative for new businesses to align with ESG principles to attract investment and achieve sustainable growth.
While challenges such as data consistency and transition costs exist, the long-term commitment to ESG remains intact, even amidst short-term geopolitical risks. New businesses must therefore be prepared to navigate these challenges, leveraging ESG regulations and legislation to guide their strategies and capital flows.
In conclusion, the commitment to ESG among investors and executives presents both opportunities and challenges for new businesses. It's crucial for these businesses to embed ESG principles into their strategies to meet investor expectations and achieve long-term success.