More boards across the world are seeing strategic importance of ESG compliance
Around the world, boards are either asking or being asked in some of the largest companies, as ESG gains prominence. According to Kroll’s ESG and Global Investor Returns Study, September 2023, global companies with better ESG ratings outperformed their peers in stock market performance between 2021 and 2023. “Globally, ESG Leaders earned an average annual return of 12.9%, compared to an average 8.6% annual return earned by laggard companies. This represents an approximately 50% premium in terms of relative performance by top-rated ESG companies.”
The report also said that more investable assets were being counted as sustainable, increasing the materiality of its impact. However, the report cautioned that with this rise in “ESG and climate-focused investment products and rising greenwashing concerns has led to a global regulatory shift toward requiring companies and investment funds and advisors to report on climate and other ESG issues”.
Investor engagement has emerged as a potent catalyst for ESG adherence. As responsible investment trends gain momentum, investors are increasingly integrating ESG factors into their financial decision-making processes.
