Sustainable Investing: What’s on the Horizon

Sustainable investing, otherwise known as Environment, Social and Governance (ESG) investing, has become a significant part of the investment management industry since 2006. There is an increasing acceptance of the investment merits of investing with ESG considerations across large parts of the investment industry. The next era of ESG investing will witness an increase in the complexity and nuance of incorporating ESG factors into investment processes. This paper focuses on ten specific areas that we believe will be at the center of the next era of ESG investing. These topics focus on ESG topics related to: a) impact, b) climate modeling, c) public policy engagement; d) China, e) concentrated ownership, f) private companies, g) complexity of energy companies, h) wealth management, i) divergent regulation and j) collaboration. ESG investing will require a major change in the orientation of the financial sector as a whole. This includes regulation and behavior of financial actors.