ESG remains high on the agenda for many, shaping the way that we approach investing, and it is therefore vital to assess this in detail.
In our latest report exploring ESG, we identify clear trends that are likely to become stronger, aided by a post-pandemic shift in momentum. We also look back at the activity that had an impact in the past year at both corporate and societal levels and take a deep dive into how we integrate ESG into our process, as well as looking at major ESG portfolio events from 2021.
From changes in how we work, to steering clear of zero-washing, many companies are facing new challenges. As investors, our job is to comprehend these nuances, support those we deem important, and position our portfolios accordingly.
We believe that ESG criteria should be considered in the same way as traditional financial criteria in terms of their capacity to affect shareholder value and therefore long-term investment performance.
Looking ahead, three key areas we predict will have an impact in 2022 are:
1. Zero-washing
The need for every sector to decarbonise has become clear and, while targets are a welcome addition to company reporting, consumers and investors are starting to require more than just targets; implementation is also vital. One thing to watch out for is “zero-washing” as companies claim to have net-zero targets, whilst actually setting targets 30 years out stymies shorter-term action.
2. Regulation
Europe has long been a leader in sustainable finance policy, and as new regulations are brought in, there will be even more transparency in the market. Read the full report for more details on the Sustainable Finance Disclosure Regulation, the EU Taxonomy, and the EU’s proposed Social Taxonomy.
3. Hybrid working and the great resignation
Working life has shifted for good, and as the pandemic moves towards becoming endemic, how companies manage or mismanage the return to workplaces will be a factor in their success – or failure.
The challenge for companies is to balance the benefits of remote work with the impact it could have on company culture. Many employees have become comfortable working from home and may not want to return to the office. The cost of getting this wrong is that employees leave, becoming part of the “Great Resignation”. High employee turnover comes at a cost.
Read the full report, which provides further analysis on these and other themes.