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ESG and Sustainability will Continue to Gather Momentum and Attract Billions of Dollars in Investments
Momentum is building around ESG. Policy makers, asset managers and business are now more willing to integrate ESG and sustainability thinking in their investment strategies. Furthermore, President Biden has successfully approved a half a trillion Climate Bill creating positive momentum on ESG actions and climate risk reduction.
What are the main challenges in ESG investing? Among the top challenges for a ESG broader adoption by companies and capital markets, is that top leadership are not yet fully behind ESG investments. Only 28 % of Fortune 500 companies have fully adopted ESG strategies (PWC 2021). Part of the problem is that larger corporation are still struggling quantifying potential ROI as well as balancing ESG with the company strategy and growth targets. Furthermore, in order for capital markets to price ESG risks and opportunities effectively, standardized data and measurements are needed. We’ve seen promising advances made recently in terms of metrics creation, but there is still a lack of high-quality, complete, and comparable ESG data that can be used to assess and price a company’s exposure to ESG risks and opportunities. New methodologies and models are also needed, as traditional methods of valuing and pricing assets, which are based on historical data do…
