When was ESG investing introduced?
It refers to a set of metrics used to measure an organization's environmental and social impact and has become increasingly important in investment decision-making over the years. But while the term ESG was first coined in 2004 by the United Nations Global Compact, the concept has been around for much longer.
The practice of ESG investing began in the 1960s as socially responsible investing, with investors excluding stocks or entire industries from their portfolios based on business activities such as tobacco production or involvement in the South African apartheid regime.
Since the launch of the first ESG ETF in 2002, the iShares MSCI A ESG Select ETF, the number and diversity of products have increased steadily.
The first group to coin the phrase ESG was the United Nations Environment Programme Initiative in the Freshfields Report in October 2005.
There is currently no federal mandate for ESG (Environmental, Social, and Governance) reporting in the United States. However, there are various initiatives and regulations that require companies to disclose certain ESG information.
Amidst this global trend, BlackRock, the world's largest asset manager, has taken a bold step by transitioning its investment strategy from ESG investing to a broader approach called transition investing. This move has significant implications not only for BlackRock but for the entire financial industry.
Exactly 90 years ago, the young Professor Adolf Berle, from the Business School of Columbia University, who today is considered the father of the ESG concept, saw major state-owned corporations as the most powerful entities capable of initiating social change.
The term ESG first came to prominence in a 2004 report titled "Who Cares Wins", which was a joint initiative of financial institutions at the invitation of the United Nations (UN).
The core concept of ESG investing has existed for centuries, dating back to religious codes banning investments in slave labor. Fast-forwarding to the 1960s and 1970s, divestments from South Africa were first advocated to protest the country's system of apartheid.
SBI Magnum Equity ESG Fund, the oldest scheme in the category, offered 15.71% in a five year horizon. Around seven schemes have a performance record of three years.
Who started the ESG movement?
Since launching the ESG movement in 2004, the United Nations promoted incontestable aspirations such as to end poverty, hunger, and war and to promote “sustainable” living—defined as using only those resources that are necessary to meet current needs and thereby preserve resources for future generations to meet their ...
Increasingly, the ESG movement has been labelled as "woke" capitalism, and accused of enabling greenwashing. As a result, Taylor says that even as businesses continue to issue net zero pledges, they've stopped labelling their business decisions as "ESG".
One of the biggest criticisms of ESG is that it perpetuates what it was partly designed to stop – greenwashing.
Similar anti-ESG bills were also passed in Alabama, Arkansas, Indiana, Kansas, Missouri, Montana, North Carolina, New Hampshire, Texas, and Utah.
The new California law requires public and private companies operating in California and earning more than $1 billion a year to measure and publicly disclose three types of greenhouse gas emissions.
In the United States, ESG-related regulatory risk primarily originates from three key sources: the US Securities and Exchange Commission (SEC), the US Department of Labor (DOL), and state legislatures and agencies.
Another BlackRock Inc. executive is joining the Biden administration, adding to the close ties between the Wall Street heavyweight and the seat of power in Washington.
Texas's public schools are pulling out billions of dollars that had been invested with asset manager BlackRock — a firm the state accused of boycotting fossil fuels.
Financial sector companies worth $10 billion or more collectively showed the biggest drop in ESG-related statements year-on-year in the third quarter of 2023, down 20%. U.S. Republican politicians have targeted banks and asset managers that support the transition away from fossil fuels to cleaner forms of energy.
ESG means using Environmental, Social and Governance factors to assess the sustainability of companies and countries. These three factors are seen as best embodying the three major challenges facing corporations and wider society, now encompassing climate change, human rights and adherence to laws.
Who owns ESG today?
Nobody “owns” ESG today, since responsibility for ESG spans the entire enterprise and no individual can make ESG happen on their own. While a leader can set a vision and strategy, only a cross-functional team can deliver it.
Environmental, social, and governance (ESG), are a set of criteria used to evaluate companies' commitment to sustainable operations. In practice, these criteria could involve adhering to worker safety practices, finding ways to maximize energy efficiency, or ensuring diversity among a board of directors.
ESG investing focuses on companies that follow positive environmental, social, and governance principles. Investors are increasingly eager to align their portfolios with ESG-related companies and fund providers, making it an area of growth with positive effects on society and the environment. S&P Global.
There is no doubt much attention on the rise of ESG, such as many reports over the past year on ESG becoming mainstream, this recent article attributing this to the pandemic: "Covid as a catalyst for ESG focus", and in my profession, more lawyers developing focus on ESG, such as outlined in this piece: "ESG catches ...
This type of ethical investing strategy helps people align investment choices with personal values. ESG stands for environment, social and governance.
