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Investment reports reveal widespread use of ESG integration

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The UN-backed Principles for Responsible Investment (PRI) has released a pair of reports that show the extent to which environmental, social and governance (ESG) issues are being integrated by institutional investors.

Integrated Analysis and Aligning Expectations provide a summary of just how much PRI signatories are analysing their investments using ESG screening.

Integrated Analysis uses case studies to investigate each issue, and after research, the PRI found that knowledge of ESG impacts can positively affect investment decisions.

Successful investment requires a thorough analysis of risk and reward and ESG issues are critical to the assessment of both”, said Neil Brown, chair of the PRI’s ESG integration working group.

This report shows unequivocally that integrated analysis can be done and is being done by some of the world’s largest financial institutions.”

Meanwhile, Aligning Expectations aims to provide asset owners with intelligence into integrating ESG issues with their selections.

Asset owners’ beliefs and expectations about how ESG issues should be managed and disclosed to best contribute to portfolio returns vary across asset classes and over time”, said James Gifford, executive director of the PRI.

The incentives and behaviour of investment managers are often not fully in line with these.

Ensuring these interests are better aligned is a fundamental requirement for the delivery of a sustainable financial system, and is central to the mission of the PRI.”

Further reading:

Poor ESG records scupper private equity deals

PRI signatories pick out top ESG engagement issues

Encouraging sustainable finance: the Principles for Responsible Investment

The principles for responsible investment: a round-up

Responsible investment bodies: what is the PRI?

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