Brown is the new green

Advancing ESG through active ownership

‘Brown’ or ‘dirty’ industries could become the most sought-after targets in capital markets. Investors focused on environmental, social and governance factors are concentrating increasingly on achieving the highest impact through transition, rather than on minimising headline risk. They have much to gain from steering corporate shifts to more effective lower-carbon strategies. These more sophisticated and targeted strategies are set to take over today’s dominant tactics of blunt exclusions and integration through blended scores. Over the next two to three years, this could affect market dynamics significantly both in terms of asset classes and sectors.

Two factors are driving this. First, the motivations behind ESG investment are changing. Rising public interest in the climate agenda over the past two years has forced many to turn to ESG investing as a way to manage reputation risk. This has even created incentives for ‘greenwashing’, where pretending to do something about ESG is seen as better than doing nothing. Still, on balance, this has been a positive and needed first step. There is an urgent need to act on climate change, and it is important to raise awareness among investors.

Συνέχεια ανάγνωσης εδώ:  omfif.org