HBR IdeaCast Why It’s Time to Finally Worry about ESG
May 21, 2019
Robert Eccles, a visiting professor at the University of Oxford and co-author of 'The Investor Revolution,' discusses the rising importance of ESG (Environmental, Social, and Governance) issues in investment. He highlights how major asset managers are now pushing companies to adopt sustainable practices that benefit both profits and broader societal impacts. The conversation also covers the need for standardized ESG metrics and how corporate boards play a key role in this evolving landscape, urging firms to transparently communicate their commitments to sustainability.
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ESG Concerns
- Many business leaders believe investors don't care about ESG because they rarely inquire about it.
- Historically, companies focused on basic sustainability measures like reducing emissions, but it wasn't integrated into core business strategy.
ESG and Financial Performance
- The shift occurred when both corporations and investors recognized ESG's impact on financial performance.
- Previously, sustainability was viewed as socially responsible investing, often excluding stocks and impacting returns.
The Tipping Point of ESG Investing
- Over 50% of assets in Europe are invested in sustainable investing, demonstrating the growing importance of ESG.
- Convincing portfolio managers to integrate ESG into financial models is crucial for widespread adoption.
