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Sustainable investing: Beyond the tipping point

The saga of ESG data looks promising, but the questions about its usefulness for investors drag on.


Sustainable investing has now reached a tipping point. 

Morgan Stanley’s bi-annual Sustainable Signals survey, published in May, interviewed 110 asset owners from North America, Europe and the Asia-Pacific region and found that the majority recognize that considering environmental, social and governance policies will be standard business practice.

Some, 57% said they foresee a time when they will only allocate to third-party investment managers with a formal ESG policy. 

That’s encouraging news, although not much had changed since Morgan Stanley’s previous report in 2018. The asset owners again listed risk management and return potential as the main drivers for adopting sustainable investment policies. 

Indeed, if there were still doubts that firms with good ESG perform better and have less downside risk those have surely been ironed out over the Covid-19 crisis.

By the time you file this article there will be more ESG ratings providers than when you started - Audrey Choi, Morgan Stanley

In May, S&P Global Market Intelligence released its analysis of 17 exchange-traded and mutual funds with more than $250 million in assets under management that select stocks for investment based in part on ESG criteria. 

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