Integrating Extra-Financial Information into Mainstream Investing

Many financial institutions now recognise that the integration of ESG issues into investment policies and decision-making can provide a more effective tool to manage risk and build a better understanding of new market opportunities. Many of the sustainability funds managed around the globe combine value-based screening with best-in-class approaches and active engagement. The most successful investors are integrating extra-financial factors into traditional financial analysis to create hybrid funds and investment instruments.

Recent market surveys have shown that some of the most innovative asset managers and brokers are using ESG research to enhance business relationships with existing clients and develop new ones. Other investment firms are creating new departments focused, for example, on the effects of climate change on the corporations in their universe. Together, these events are a clear indication of the growing importance of ESG issues to the market.