Investors have poured record amounts of money in recent years into funds that aim to contain climate change and promote social good; in 2020 ESG inflow accounted for about a fourth of the money that flowed into all U.S. stock and bond mutual funds, capturing over $50 billion of net new money from investors in 2020, more than doubling the $21 billion funneled into funds that apply environmental, social and governance principles in 2019, according to Morningstar.
Environmental, Social, and Corporate Governance Rhetoric
This much is true: each year the so-called ESG movement has been getting more and more dedicated pages in corporate annual reports, as companies look to outdo one another with an array of feel-good efforts. “I’ll see your recycled ocean plastics initiative and up the ante by one community microfinance program in rural Mozambique.”
“Both ESG investing and financing are here to stay, with steadily increasing numbers of pension funds, asset managers, sovereign wealth funds, stock exchanges and banks requiring, or incentivizing, appropriate and meaningful ESG information and activities in order for companies to be deemed ‘credible’ as a fund recipient," says Doug Woodring, Founder of Ocean Recovery Alliance.
“Moreover, many of the incoming generation of new employees are specifically asking about the ESG activities that their potential employers undertake, all of which means that fashion and retailers need to consider not only their packaging and consumer-facing content but must look far into their supply chains to make sure they don’t get caught out with a bad story. Investing with real and meaningful ESG metrics, in fact, is one of the only, and most useful ways to reshape a sustainable planet, with improved environments for our communities which businesses can then continue to serve,” added Woodring.
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