The world of ESG investing has undergone a sea change. Once seen by some as a niche strategy, philanthropic experiment or even a clever marketing tool, it has since seen a raft of scientific and geo-political developments, which have shifted opinion on both the magnitude of saving our planet and the role we all play. This has impacted the way industries operate today, including the financial markets, with the introduction of the triple bottom line - people, planet, and profit.
Why safeguarding the secret sauce is critical to ESG investment success
More than ever before, many investment managers are looking to ESG to meet their clients’ needs on several levels: from delivering risk-adjusted financial performance, to creating an impactful platform, where they can take positive action. This renewed sense of corporate citizenship, where asset managers and asset owners are reflecting moral values within their investments, has led to a surge in inflows. According to Morningstar1, money invested in ESG funds grew 10x between 2018-2019 and has more than doubled from 2019 to 2020, despite the pandemic.
This unprecedented investment momentum has not only driven greater demand for ESG data, supplied by both traditional players and newer, niche ESG data vendors, but has also firmly placed ESG data among the more traditional financial data, used for measuring systemic risk and predicting financial performance.