The single most critical decision metric for any investor, whether that investor is an individual with a retirement target or hedge fund manager responsible for a billion-dollar portfolio, is risk. Unfortunately for investors, this is much easier said than done. Gaining a complete understanding of the risk an investment carries is nearly impossible as there are a virtually infinite number of variables ranging from shifting consumer preference, unexpected technological woes or competitor innovations, macro-economic trends impacting currency values, or even unforeseeable global pandemics. The best investors therefore are those that are best able to identify, analyze, quantify, and account for risks before allocating capital.
Until recently, investors have mostly searched for risk indicators in financial figures like debt retained, value of assets owned, or revenue trends. While these remain valuable pieces of information, they paint an incomplete picture; sometimes non-financial metrics can be just as illuminating to true risk exposure as metrics buried in 100-page financial reports. Enter ESG: Environmental, Social, and Governance.
ESG lacks a single definition but can be thought of as a set of metrics that inform how well a company is performing in terms of environmental sustainability, social contributions, and governance practices such as ethics and transparency. Savvy investors have realized that collecting data around these three elements allows them to better assess investment risk, make better business decisions, and ultimately achieve safer and more consistent returns on deployed capital. S&P Global, for example, assessed the performance of 26 ESG ETFs and mutual funds for the year starting March 5, 2020 (the day the WHO officially declared a pandemic) and found that 19 of those 26 funds outperformed the S&P 500 over that same time frame. S&P data also shows investors have caught on – flows into sustainable investment funds hit USD51.1 billion in 2020, doubling 2019 levels and representing a 10x increase from 2018.
The evidence is overwhelming: to succeed in today’s market and attract capital, a robust ESG strategy is paramount. Is your organization ready to respond to the latest investor demands?
On July 28, 2021, ESG experts Shannon Lardi and Michael S. Dae from IsoMetrix, and ESG Principal Analyst Yaowen Ma from the leading independent ESG analyst and consulting firm, Verdantix, hosted a live webinar about what investors are looking for when it comes to companies’ ESG strategies. During this one-hour session, they explain how to gather the data needed to satisfy investor demand for all elements of ESG from environmental emissions to social sustainability. They highlight the disclosure frameworks and standards that are most important to key stakeholders and demonstrate how technology can be used to streamline ESG reporting and ESG program management. This webinar offers data-driven insights and best practice advice to help you build and maintain an ESG program that exceeds expectations and creates value for your investors, your community, your employees, and your (our!) planet.
Click below to learn more and watch the on-demand webinar.