In the past few years, sustainability has moved from niche to mainstream. Investors in the apparel space see it as adding to long-term value. It helps them determine long-term risk and a company’s dedication to long-term value. Sustainability creates value and implies lower risk and higher returns.
There has been a growth in investment strategies that are more focused on environmental and social governance (ESG) integration. Today, 90 per cent of the top 100 asset managers around the world have committed to evaluating ESG factors in all their decisions. Consumers’ increasing demand for transparency in sustainability and corporate social responsibility, have led to a jump in company- issued sustainability reports.
Only 20 per cent of S&P 500 companies issued a sustainability report in 2011 and today 82 per cent do. There is set to be a huge shift in the way investments are selected over the next two years. Environmental and social governance factors will play a huge role.
Firms are putting their investment weight behind ESG. However, there are challenges. Obtaining and analyzing ESG data will require new tools, resources and skills for both asset managers and owners. So technology will play an extremely important role in helping them meet their goals.