ESG is an acronym that stands for Environmental, Social, and Governance. Non-financial elements are increasingly being used by investors as part of their analytical process to identify material risks and growth opportunities.
As ESG measures are not frequently included in mandatory financial reporting, companies are increasingly including them in their annual report or in a separate sustainability report.
Several organisations, including the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD), are partnering to develop standards and define materiality in order to facilitate the incorporation of these factors into the investment process.
As demand for ESG investment grows, numerous significant trends arise, spanning from climate change to social instability. The coronavirus pandemic, in particular, has heightened debates concerning the relationship between sustainability and the financial system.
