Risk, reward and sustainability - future proofing the ESG economy

In the aftermath of the crucial COP26 climate talks and with key sustainability targets becoming more of a priority, Environment, Social and Governance (ESG) criteria have moved to the forefront of fund managers’ decisions, meaning that risk, reward and sustainability are now the three key considerations for fund managers.

As sustainable investments grow, so too does the need for risk management solutions that are specifically tailored to ESG criteria. Although approaches to sustainability are many and varied, the investment industry will need to coalesce around a few core benchmarks that are capable of attracting sufficient liquidity to make risk management straightforward and economic. They will also need to fit with the required ESG credentials of regulators and investors. The obvious place for the market to turn to is specialised ESG versions of existing, highly successful and highly liquid benchmarks....