What is the value of CSR means to a corporate?
How ESG helps corporate to make investment decisions?
Making Investment Decisions through ESG information
Forbes article pointed out some insights from Tim Mohin, Chief Executive of the Global Reporting Index on why the world continues to shift toward environmental, social, and governance (ESG) reporting: 「In the past decade there has been a tremendous upswing in interest coming from the financial sector. With over 90% of the largest companies now filing sustainability reports (85% of the S&P 500), the data is plentiful. But that is not new. What is new is the interest in using the information for investment decisions. A recent study from Oxford University found that more than 80% of mainstream investors now consider 『ESG』 — environmental, social, and governance — information when making investment decisions. And the numbers are compelling — globally, there are now $22.89 trillion of assets being professionally managed under responsible investment strategies, an increase of 25% since 2014. This number is so large it needs context — it exceeds the gross domestic product of the entire U.S. economy.」
A higher return with lower risk is possible?
Genuinely speaking, investors are looking for higher returns with lower risk, whereas nowadays, ESG reporting opens a door for risk assessment and management. ESG risks can be estimated by the weighting and impact of environmental risk, product risk, social risk, governance risk, to arrive at an overall ESG risk index.
Capture opportunity and Create value through ESG investment
From the case of KKR breaking through the problem of a large fund that could not have right capital for impact projects, by creating this Global Impact Fund to seizes opportunities in companies that size is $100 million and valuable from an impact perspective, institutions and family offices should rethink the traditional concept of CSR and start looking into opportunities.
Cost of ESG non-conformity
ESG upraises CSR to the company’s management and board-level since it is stakeholders and risk-related. Investors could review company activities with a cost-analysis and comparison of ESG conformity and non-conformity elements so as to have a picture.