WealthManagement.com, March 11, 2021 By Cindy Bohlen
Encouraging news arrived late last year about the fast growth of investments managed with attention to environmental, social and governance (ESG) factors. Seventeen trillion was the headline dollar figure in the latest biannual report from trade association US SIF, which tracks the responsible investing industry.
Seventeen trillion represents a 42% increase over the dollar level US SIF found just two years ago. Today 33% of professionally managed dollars in the U.S. is invested with at least some consideration to ESG issues.
That headline growth is impressive and welcome, but I’m actually more struck by some of the undercurrents in the report, particularly with respect to what investors say is most important to them.
From Governance to Environment to Social…and now back to Governance
Of the three letters in “ESG,” it’s fair to say the “G” came first, in the sense of widespread awareness of the benefit of applying the concept as an investment factor. The level of a board’s independence—for example, by incorporating independent Chair and CEO roles—came up for widespread awareness in the 1980s, as did the level of executive pay.