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How Big Investors Can Have a Bigger Societal Impact
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How Big Investors Can Have a Bigger Societal Impact


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Editorial Rating

8

Qualities

  • Analytical
  • Overview
  • For Experts

Recommendation

As environmental, social and governance (ESG) investing mushrooms, institutional investors face the challenge of setting standards in portfolio selection. While a common tactic is to avoid companies whose ESG practices are not up to snuff, investors’ active engagement is more likely to bring about lasting change and create shareholder value. This expert article from Boston Consulting Group professionals David Young, Vinay Shandal and Sarah Burleigh outlines why a proactive approach is critical, but examples of how some investors tackle ESG investing would have improved the text. Nonetheless, getAbstract recommends it to investors and financial executives.

Summary

Research reveals a positive correlation between a company’s environmental, social and governance (ESG) ratings and its financial results. Firms with higher ESG scores tend to produce greater profit margins with less risk. Driven by investor demand for both sound corporate practices and solid returns, the market for responsible investing grew from $18 trillion in 2014 to $23 trillion in 2016. 

But many large investment funds and institutional investors address a company’s governance differently than they approach its social and environmental practices. Investors actively ...

About the Authors

David YoungVinay Shandal and Sarah Burleigh are professionals with the Boston Consulting Group.


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