The Clarion Call for ESG

Large asset managers, notably BlackRock, Vanguard and State Street, strongly support the notion that corporations should pursue a social purpose, particularly sustainability, and they are looking to make investments that deliver value to a broad array of stakeholders. They point to studies showing consumers are more likely to base buying decisions, job-hunters more likely to seek employment, and investors more likely to invest in companies they believe to be environmentally friendly. Thus, being green is increasingly being seen as a commercial imperative.

In the institutional asset world, socially responsible investing nearly quadrupled over the past year. In response to surging investor interest as well as to more companies trumpeting their ESG metrics, mutual and exchange-traded funds are increasingly referencing ESG in their prospectus documents. Demand appears strong, especially among women and the millennial generation. But for ESG to go mainstream, it will have to overcome obstacles, including confusion about what it means, how it can be measured, and whether it’s compatible with the historic goal of most advisers and investors, namely to maximize returns.

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About the Author(s)

Robert H. Rock

Robert H. Rock is chairman of MLR Media.


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