ESG: Speaking the Same Language (Part 1)

Written by
Nick Giometti
  • History and relevance of ESG as a framework (Part One)
  • Clear distinctions between ESG and other “Responsible Investing” strategies (Part Two)
  1. ESG is about risk, specifically those that live outside a company’s financial statements. Despite not having a line item on a balance sheet, environmental, social, and corporate governance are core tenets of business operations, and executing or failing to execute on them materially affects a company’s long-term financial performance.
  2. ESG is massive. Over $37.8 trillion assets under management are allocated to ESG investment strategies and it continues to grow rapidly worldwide. Countries outside of the U.S. like Japan are rallying both public and private institutions around the idea of long-term economic and environmental sustainability.
  3. ESG is not new, but ESG data is. ESG has been around since 2004 but did not gain momentum until the mid-2010s. It gained momentum not only because corporate leaders and asset managers championed the movement, but also because modern data infrastructure and data vendors were able to sufficiently capture metrics necessary to evaluate a company’s ESG exposure.