Tackling the real root of the ESG problem

Less environment, more governance threatens to undermine firms' green credentials

It is no surprise the demand for environment, social and governance (ESG)-based investing has sky-rocketed in recent years.

The combined AUM of global mutual funds with an ESG focus passed $1trn in October last year, rising by 60% since 2012, and 2018 saw 410 new launches in the space, according to Morningstar. But until recently the majority of firms tended to focus on the 'G'. Countless reports have shown managers are engaging more with the boards of their holdings, increasingly challenging them on issues such as diversity, executive pay and board effectiveness, which has been hugely beneficial. ESG drives outperformance as 'social' focus begins to see gains But while ensuring companies are implementi...