Investing in the Future
The origins of responsible investing go as far back as the 1700s, when Quakers prohibited members from participating in the slave trade. More than two centuries later, in the 1960s and ʼ70s, socially responsible investment was a way for concerned investors to address such issues as civil rights, equality for women, and apartheid. In the 1990s, it became synonymous with exclusionary investing, with the goal of avoiding the stocks of objectionable companies based on certain criteria.
Fast forward to today, when more and more investors are incorporating ESG analysis into their decisionmaking. According to statistics compiled by the Global Sustainable Investment Alliance, at least $13.6 trillion of professionally managed assets incorporate ESG concerns into their investment profile. This represents 21.8 percent of the funds under management in the regions surveyed, demonstrating the scale and scope of this trend. The change is due to growing evidence that ESG factors, when integrated into investment analysis and decision-making, may offer investors potential long-term performance advantages.
Research conducted by Allianz—a German insurance group—found that between 2006 and 2010, investors could have added an additional 1.6 percent a year to their investment returns by allocating to portfolios that invest in companies with above-average ESG ratings.