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4 signs to look for when evaluating ESG investments – TechCrunch


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4 signs to look for when evaluating ESG investments – TechCrunch


Bruce Dahlgren
Contributor

Bruce Dahlgren is CEO of MetricStream, a risk management (IRM) and governance, risk and compliance (GRC) company.

Browsing travel options on Google Flights, you may have noticed that airlines have begun to incorporate carbon emissions data into their offerings to consumers.

As a frequent flyer, all things — including price — being equal, I’ll always choose the more carbon-efficient flight. This is novel and striking to me. It’s exciting to have a new data point to understand my personal carbon footprint, but it also highlights a real inflection point for the investor community.

If environmental data is already available and marketable at the consumer level, this means the era of ESG – environmental, social and corporate governance – is essentially here at the enterprise level and it is the next big frontier in corporate governance, risk and compliance (GRC).

But right now, ESG is seen by some as all talk, little action – there may be hundreds of executives touting the importance of ESG, but we still lack a universal measuring stick for clearly understanding ESG performance. Without that, it’s difficult to determine what is right from what is wrong, or what is a strong investment from a shortsighted one.

The common denominator that investors must understand, without a doubt: The key to understanding ESG is all about collecting the data and having it in an actionable format for analysis. Once key metrics are measured, investors and executives alike can make smarter decisions. So how do we value ESG performance and make it more actionable?

Investors need to start thinking about ESG risk in the same way they consider investment risk, as a first step.

A recent Morgan Stanley survey determined that 85% of all individual investors were interested in sustainable investing, up 10 percentage points from 2017, while a Bloomberg report indicated that ESG assets may hit $53 billion by 2025, which would be one-third of the world’s total assets under management.

Investors need to start thinking about ESG risk in…



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