The 'S' in ESG: What benefits can social factor analysis offer investors?

Putting people back in the heart of businesses

Environmental and governance factors are more easily quantifiable and applicable to investment strategies than social factors, but investors could be missing out on vital risk management tools, potential performance gains and growing client interest by marginalising the 'S' in ESG investing.

Governance has long been a focus of investors when analysing investee companies, and in recent years the emergence of benchmarks and other analytical tools has made the link between environmental factors and performance clearer than ever. Fewer such metrics exist for social investing, which is broadly defined as targeting companies that create "positive, long-term effects for society on a national, regional and local level as well as financial returns for clients and shareholders", while working with customers, partners and suppliers "that uphold similar values", CEO of Gresham House Ton...