Service Providers Bet Big on ESG

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The concept of ESG (environmental, social, governance) is building greater traction among institutional investors globally, especially in the West. Norway’s Government Pension Fund Global (GPFG), a bellwether among large public investors, is increasingly shifting assets toward environmental-tilted strategies and taking a slightly more vocal role on corporate boards to affect change. This type of activist investing tends to be welcomed among Occidental governments. Seeing the writing on the wall on the service provider front, index provider MSCI acquired GMI Ratings, a developer of ESG analytics, in late June. S&P Dow Jones Indices, which has ESG indices, sees more investor demand for these types of solutions. Julia Kochetygova, senior director at S&P Dow Jones Indices in the ESG practice, provided some insights as to why sustainability-focused investing is gaining traction among institutional investors. “Investing on the basis of ESG criteria, or sustainable investment, is a strategy that aims to provide downside risk protection and capture future growth opportunities,” Kochetygova told the Sovereign Wealth Fund Institute. “What is behind the ESG is usually bigger strategic focus of management and better ability to innovate in products and technologies by capturing emerging market trends or even setting new standards. It also usually means stronger board oversight, higher resource efficiency and lower carbon footprint.”

Climate Change and ESG Demands from Institutional Investors

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