ESG

In 2022, financial market turmoil, pockets of investor skepticism over perceived ”greenwashing,” and the increased politicization of ESG led to diminished flows into sustainable funds and weaker returns for most ESG funds on a year-over-year basis. This hardly spelled doom for the ESG movement. A confluence of circumstances including Russia’s invasion of Ukraine, supply chain disruption, consumer price inflation, growing worker activism, and loud left-versus-right political debates over ESG kept it prominently in the spotlight.

ESG is clearly a focus of investor attention. We expect interest in ESG-driven analysis to rise as regulators move toward mandating standardized corporate ESG disclosure, and investors put increased pressure on companies to put more focus on environmental, social and governance issues. We also anticipate that ESG investing will grow in acceptance as it becomes better defined and as funds more clearly explain the extent to which ESG considerations govern their investment practices.

What we’re watching

• Energy Transition and Security
• Supply Chains & Government Oversight
• Macro Stress
• Fund Nomenclature