- The coronavirus pandemic has shone yet more light on how investors allocate their money and how company operations influence our societies.
- But there are questions about whether ESG is really effective in improving and supporting our communities.
- A portfolio manager told CNBC that companies can “hide” their actual carbon footprint by outsourcing parts of their production process.
LONDON — There’s growing appetite to invest in a more sustainable way, but experts warn that transparency is needed in this space if it’s to really do any good for the planet.
ESG (environmental, social and corporate governance) describes investments made with an aim to contribute to a better environment, society or workplace and it’s becoming increasingly popular. The share of global investors that have applied ESG criteria to at least a quarter of their total investments has jumped from 48% in 2017 to 75% in 2019, according to data from audit firm Deloitte.
And this is only expected to keep rising.
In the U.S. alone, professional investors could have 50% of their total investments in ESG assets in the next five years, data from Deloitte also showed.
“There is this increasing understanding in society that we need to care about the climate, about social conditions of employees,” Zacharias Sautner, a professor of finance at the Frankfurt School of Finance & Management, told CNBC last month via Zoom, adding that this is being reflected in the way investments are made.
The coronavirus pandemic has shone yet more light on how investors allocate their money and how company operations influence our societies. For instance, a number of multinationals have announced in recent months new measures to ensure a more equal workplace.
But there are question marks on whether ESG is