Value of ESG Integration

What are the potential benefits of ESG integration for both investors and investees?

• Opportunity to achieve superior financial returns

  A strong ESG lens could enable a better cross-pollination of ideas and encourage broader collaboration allowing analysts to spot opportunities early and position them advantageously, ahead of others.  The upside of getting the ESG integration right is significant because businesses are going through transformation across healthcare, e-commerce, banking, asset management, autos, and many other sectors.

• Better Capital Reservation

  A solid fundamental analysis with a deep understanding of the transitionary dynamics can also help investors avoid losses.  Globalisation, technology, demographics, climate change and the depletion of natural resources are putting the legacy financial structures at risk.  A thorough ESG analysis can help investors anticipate risks and take a defensive posture by liquidating or reducing exposure to the most vulnerable positions.

• Lengthening of the performance cycle

  Environmental, social, and governance considerations offer a cognitive bridge between highly sophisticated investment professionals and the public.  ESG issues are more personal and relatable than a categorisation of risk or a balance-sheet statement.  Clients will be less likely to withdraw capital in periods of heightened volatility, and in some cases allocate more to a chosen strategy or manager when they understand the risks better.

• Making an impact by solving a real issue

  Making a real impact satisfies a strong calling and our collective altruistic tendencies of being in the agency of others.  Personal drive for meaning and to leave a legacy was separate from our financial decisions historically but is coming to the fore.