Why engage with ESG? Don’t underestimate the economic significance

I hate to be a party pooper, but…

We’re all conscious that ESG has fallen out of favour as credible subject matter over the last year, especially in the U.S. But there is also an underlying understanding that allocators need to be updated on the investment implications of geopolitical challenges and ongoing market volatility through technology, energy transition and decarbonization lenses, all of which fall under the ESG umbrella in some shape or form and come into sharp focus with one eye on the potential effects of the impending U.S. election.

So, in the spirit of New York Climate Week and other upcoming events, such as COP29, it’s time to dive back into ESG.

Look through a technology lens

The relationship between AI and sustainability is an ongoing conversation with a need for discourse on practical applications and implications. Mawer considers both the challenges and opportunities or powering AI and the environmental implications.

The energy transition and decarbonization imperative

The insightful Megatrends analysis from PGIM Jennison Associates reframes this picture in the context of multiple, interconnected global crisis and offers insights into potential solutions and approaches for investors wading into this “energy trilemma”.

Meanwhile, Nuveen considers the importance of the role of private credit in the race to decarbonize as part of one of Savvy’s own Special Reports.

Crying out for credible data and analysis

The search continues for access to global data and practical solutions when it comes to environmental and governance concerns in particular. Invesco charts this successfully with a laser-like focus on rising global temperatures in their recent commentary on temporary and longer-term trends and Wellington Management has an insightful podcast episode on the effects of climate change on capital markets.

Commercially speaking—seeking returns

Robeco looks at five-year expected returns in an ESG context, also providing multiple helpful datasets and charts to signpost routes forward, combined with expert commentary. The firm also considers the credibility of transition investing in this recent analysis of the commercial opportunities to be found in net zero goals.

Also worth reading is Manulife Investment Management’s short, but information-dense article that takes the economic and sustainability connection further by emphasizing why protecting and valuing nature is an economic imperative .

Exploring emerging markets

Finally, PGIM Fixed Income highlights opportunities for impact in emerging markets , despite multiple challenges relating to politics, regulatory constraints (or lack thereof) and insufficient resources.

Balancing the scales

With numerous opportunities to balance the obvious challenges, it’s vital for allocators to be able to make informed decisions on the impact of investments—not just in a sustainable finance context, but also considering the wider macro environment and future landscape.

As with all things, it’s a question of balance—financially, naturally—but also in the way data and insights are represented and made available to support and inform decision-making. Not forgetting the delicate balance when it comes to people and planet, which has been forgotten in recent times with the ever-fluctuating global political agenda.