452
H. Y. Ching
Responsible RI. The latter using the environmental, social and governance factors
ESG and understood as the most current and most used corporate metrics of sustainability. Subsequently, with these developments in SI types, it traces the development
of Corporate Social Responsibility (CSR) over time and the emergence of new techniques and concepts such as Integrated Reporting (IR). He then investigates who
the responsible investors are, what they want and what kinds of ESG initiatives
they expect from corporate managers to create, monitor, and report. This investment
strategy refers to the practice of choosing actions based on environmental and social
factors (Ziegler and Schroder 2010). To do so, such ESG information and initiatives
should be reported in corporate reports, notably IR.
The link between ESG factors and investment performance was formalized by the
United Nations in 2006 when it enacted the Principles for Responsible Investment
(PRI), a set of practice standards offered for voluntary adoption by investors (Radu
and Funaru 2011). The Principles are based on the conviction that ESG issues may be
relevant to the financial interests of investors, affect the performance of investment
portfolios and therefore are important for the Principles for Responsible Investment
(2015).
Investors and fund managers are aware of the opportunities resulting from Socially
Responsible Investment (SRI). Specifically in 2017, more than a quarter of the world’s
professionally managed assets—somewhere around US$ 22.9 trillion—are in some
sort of sustainable investment, with US$ 8.7 trillion of that in the United States and
US$ 12 trillion in Europe (Stanley 2018). In this context, global growth in sustainable
investment is aligned with the emergence of literature specialized in the expansion
of organizations that meet the environmental, social and governance (ESG) criteria
in their strategies.
Responsible investment is fast becoming a predominant concern in the investment
industry. The large growth in the number of investors who have adopted the Principles
for Responsible Investment is only one of the most recent indicators of the industry’s
interest in integrating ESG factors in investment management (Price Waterhouse &
Coopers 2015). In early 2016, global sustainable investment reached US$ 22.89
trillion, compared with US$ 18.28 trillion in 2014, a 25% increase. Previously, global
sustainable investment assets grew 61% from 2012 to 2014. Still, almost all regions
saw increases in their SRI assets relative to their professionally managed assets,
with the largest increase seen in Australia and New Zealand (Global Sustainable
Investment Alliance 2016).
There are several reasons for the worldwide growth in demand for ESG strategies,
including the desire for greater transparency; institutional investors are looking for
ways to understand the internal workings of a company beyond traditional financial
analysis. Geographically, about two-thirds of the demand comes from Europe, where
institutional investors often ask managers to disclose how they are integrating ESG
into their share classes. In the first quarter of 2017, 79 new investors joined the PRI,
bringing the total number of signatories to 1600 (UBS Asset Management 2017).
H. Y. Ching
Responsible RI. The latter using the environmental, social and governance factors
ESG and understood as the most current and most used corporate metrics of sustainability. Subsequently, with these developments in SI types, it traces the development
of Corporate Social Responsibility (CSR) over time and the emergence of new techniques and concepts such as Integrated Reporting (IR). He then investigates who
the responsible investors are, what they want and what kinds of ESG initiatives
they expect from corporate managers to create, monitor, and report. This investment
strategy refers to the practice of choosing actions based on environmental and social
factors (Ziegler and Schroder 2010). To do so, such ESG information and initiatives
should be reported in corporate reports, notably IR.
The link between ESG factors and investment performance was formalized by the
United Nations in 2006 when it enacted the Principles for Responsible Investment
(PRI), a set of practice standards offered for voluntary adoption by investors (Radu
and Funaru 2011). The Principles are based on the conviction that ESG issues may be
relevant to the financial interests of investors, affect the performance of investment
portfolios and therefore are important for the Principles for Responsible Investment
(2015).
Investors and fund managers are aware of the opportunities resulting from Socially
Responsible Investment (SRI). Specifically in 2017, more than a quarter of the world’s
professionally managed assets—somewhere around US$ 22.9 trillion—are in some
sort of sustainable investment, with US$ 8.7 trillion of that in the United States and
US$ 12 trillion in Europe (Stanley 2018). In this context, global growth in sustainable
investment is aligned with the emergence of literature specialized in the expansion
of organizations that meet the environmental, social and governance (ESG) criteria
in their strategies.
Responsible investment is fast becoming a predominant concern in the investment
industry. The large growth in the number of investors who have adopted the Principles
for Responsible Investment is only one of the most recent indicators of the industry’s
interest in integrating ESG factors in investment management (Price Waterhouse &
Coopers 2015). In early 2016, global sustainable investment reached US$ 22.89
trillion, compared with US$ 18.28 trillion in 2014, a 25% increase. Previously, global
sustainable investment assets grew 61% from 2012 to 2014. Still, almost all regions
saw increases in their SRI assets relative to their professionally managed assets,
with the largest increase seen in Australia and New Zealand (Global Sustainable
Investment Alliance 2016).
There are several reasons for the worldwide growth in demand for ESG strategies,
including the desire for greater transparency; institutional investors are looking for
ways to understand the internal workings of a company beyond traditional financial
analysis. Geographically, about two-thirds of the demand comes from Europe, where
institutional investors often ask managers to disclose how they are integrating ESG
into their share classes. In the first quarter of 2017, 79 new investors joined the PRI,
bringing the total number of signatories to 1600 (UBS Asset Management 2017).