Energy

Analysis And Impact Of The ESG Culture On Sustainable Investments

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<p>Trends in the world are increasing and leaning towards socially responsible investments, companies are more aware of the impacts of their decisions on investments.</p><p>For this reason, they are more strategic their analysis and investment resources, where leaving a positive impact, considering environmental, social, and corporate governance criteria, to advance their sustainability ambitions.</p><p>In this regard, in the first half of 2021 worldwide funds with a green label Sustainability-linked bonds (SLB) and Transition bonds reached nearly half a trillion (USD496.1bn), according to Climate Bonds Initiative, 2021. Setting for Record Year &ndash; Brings Long Awaited $1Trillion Annual Green Milestone into Sight- Social &amp; Sustainability Growth adds Extra Spice.</p><p>Those investments came from all asset classes, the series of new instruments level built to help the ESG focused financial community, which has exponentially growN in 2021. Investors, regulators, and stakeholders in capital markets are paying increasing attention to social issues and this ESG theme will rise in prominence over 2022 and beyond.</p><p>ESG mindset, it&rsquo;s about making a difference for companies&rsquo; business, communities and our world. Seeking new ways of thinking and doing, working together to find brighter solutions for the generations to come.</p><p>Indeed, it is unquestionably the multiple benefits from embracing sustainability according to (HSBC, 2022) report.&nbsp; Highlights that Environmental, Social and Governance (ESG) targets are increasing. And external pressures to do so are broad based, but firms feel it most from consumers, government, and supply chain partners.</p><p>Most companies expect sustainability performance to boost sales (86%). While a plurality of businesses (41%) expects increased growth of up to 5% over the next year, for a sizeable minority the opportunity is far greater. More than a quarter (28%) expect sustainability to boost growth by between 5% and 10%; and one in six (17%) expect increased growth more than 10%.&nbsp; Thus, if Investors are seeking further and for more clarity on labor related ESG risks, it is driving an increase in regulatory and voluntary disclosure frameworks and the push for more consistent, quantitative reporting.</p><p>From my standpoint, ESG is the new game changer, as it is an essential metric for capital markets. Investors are increasingly focused on climate and ESG-related disclosures and investments. Companies with strong ESG performance have higher returns on their investments, lower risks, and better resiliency during a crisis.</p><p>As a result, companies should anticipate greater scrutiny of their ESG performance. They need the right combination of strategy and technology to support their journey to reduce risk and enhance brand reputation.</p><p>As ESG keep gaining momentum, returns would be as good as or better than non-ESG investment, thus companies must need the right combination of strategy, technology, and innovation, to support their journey to reduce risk and enhance brand reputation to capture the best opportunities of tomorrow.</p>
KR Expert - Mauricio Bribiesca Roldan