Which is the oldest responsible investing methodology?
The earliest precursors of socially responsible investing date back to the Pentateuch – the first five books of the Bible, believed to have been written by Moses as early as 1500 BC. The books refer to a Jewish concept called Tzedek (justice and equity) and how it should govern all aspects of life.
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.
In 2004, the term “ESG” became official after its first mainstream appearance in a report titled, “Who Cares Wins.” The report illustrated how to integrate ESG factors into a company's operations, breaking down the concept into its three basic components: environmental, social and governance (or corporate governance).
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.
Socially responsible investing's origins in the United States began in the 18th century with Methodism, a denomination of Protestant Christianity that eschewed the slave trade, smuggling, and conspicuous consumption, and resisted investments in companies manufacturing liquor or tobacco products or promoting gambling.
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.
The UN makes it official
A 2004 report from the United Nations – titled Who Cares Wins – carried what is widely considered the first mainstream mention of ESG in the modern context. This report leaned in heavily, encouraging all business stakeholders to embrace ESG long-term.
The story of ESG investing began in January 2004 when former UN Secretary General Kofi Annan wrote to over 50 CEOs of major financial institutions, inviting them to participate in a joint initiative under the auspices of the UN Global Compact and with the support of the International Finance Corporation (IFC) and the ...
However, the term ESG did not come into use until 2005. Yet, ESG has always included business objectives while striving to make the world a better place. Since that time, the terms ESG, CSR, and sustainability have been used interchangeably by companies.
ESG reflects a company's external impact on society and the environment. CSR focuses primarily on activities companies undertake to increase their positive global impact. Developing a CSR model enables businesses to disclose their efforts to themselves, stakeholders, employees, and the public.
What is the new name for ESG?
The ESG moniker has become so politicized that it now prevents clear-headed thinking, said Alex Edmans, who teaches at London Business School. He's instead proposing the term “rational sustainability.” It may be bland, he said, but sustainability is about producing long-term value—and that's hard to politicize.
The first modern mutual fund was launched in the U.S. in 1924. The oldest mutual fund still in existence is MFS' Massachusetts Investors Trust (MITTX), also established in 1924.
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.
Activist investors are expected to carry out fewer environmental and social campaigns this year after the strategy proved less lucrative than other shareholder agendas, according to business consulting firm Alvarez & Marsal Inc.
SRI is a type of investing that keeps in mind the environmental and social effects of investments, while ESG focuses on how environmental, social and corporate governance factors impact an investment's market performance.
Benjamin Graham, dubbed the "father of value investing," became famous for his investing style, literary contributions on investing, and research. Graham lectured at his alma mater, Columbia University, and eventually became a professor of finance there.
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.
BlackRock is publicly owned, with its shares held by various shareholders, including institutional investors like Vanguard Group and State Street Corporation and individual shareholders. The specifics of these shareholders can change over time.
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.
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 ...
Who created the ESG movement?
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).
| Company | ESG Risk Rating | Industry Rank |
|---|---|---|
| Mercedes-Benz Group AG | 20.1 Medium | 23 out of 90 |
| Stellantis NV | 23.4 Medium | 33 out of 90 |
| Tesla, Inc. | 25.3 Medium | 48 out of 90 |
| BYD Co., Ltd. | 26.8 Medium | 61 out of 90 |
One of the most vocal criticisms regarding ESG is its perceived vagueness and inconsistency. The lack of a universal framework or standardized guidelines has led to companies interpreting and reporting ESG metrics in varied ways.
In all, BlackRock's ESG-related assets under management swelled 53% from the beginning of 2022 through the end of last year, according to data provided by Morningstar Direct. Over the same period, the wider ESG fund market grew only about 8%.
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.
