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Esg Investment Report Case Solution & Answer

Esg Investment Report Case Solution

ESG Investing in United States & Europe

ESG (Environmental, Social and Governance) investing refers to the sustainable investing, which aims at generating positive returns over the investments and contributing towards the long term impact on the society, business performance and the environment. ESG is defined by the Financial Times Lexicon as a generic term, preferred by the investors for the evaluation of corporate behavior and the financial performance of the corporations in the capital markets (ADEC Innovations, 2019). Moreover, it is added that ESG refers to a part of the non-financial performance indicators, which include: key issues related to the corporate governance and ethical and sustainable issues.

According to the money managers, who prefer to use the ESG factors in their investment analysis; the changing climatic condition has become a top concern or a leading criteria for evaluation, before money is put into investment. According to the ESG criteria; the amount of professional money invested,has increased sharply, as measured by a group of investment. According to the ESG criteria; the invested money in the United Sates has reached to $51.4 trillion, which represents 33% of the total United States’ Assets, under the professional management.

Moreover, a report on the “US’s Sustainable and Impact Investing Trends” issued by the US SIF Foundation in 2020, revealed that the sustainable investing assets in the United States have reached to $17.1 trillion, with an increase of 42% as compared to the fiscal year 2018 (Carlson, 2020). The group also claimed that the sustainable investing not only generates financial returns but it also serves in creating environmental and social goods. The ESG investing covers each and every practice followed in the industries, such as: the implementation of fair labor practices so that the independent corporate governance can be promoted and a reduction could be brought in the harmful materials impacting the environment.

The report published by the US SIF revealed that in 1995; the United States’ sustainable assets amounted to $639 billion and these assets have grown ata compounded annual growth rate of 14%, as shown in figure below:

However, while talking about the ESG investment; the United States is considered a laggard in comparison to Europe. On one side, the United States’ money managers are struggling to create a trade off between the consideration of environmental, governance and social factors and generating returns over the investment.However, the European firms have taken the lead in the booming sustainable fiancé industry, which has seemingly reached to a $40 trillion industry (Marsh, 2020).

The data shows that the Europe enjoys a dominant position in the debt market; however, the sales of the United States’ green bond has declined by 5%. Similarly, in the sustainable funds; the European offerings received more inflows, which were five times larger than the inflows received by the United States’ offerings in the sustainable funds. It is estimated by the Prevaricate house Coopers LLP that 70% of the global ESG mutual fund assets are held by the European firms.

The contentious politics and regulations have led to the laggard –position of the United States in the ESG investing. In Europe, the green investment is being promoted with great enthusiasm; however, the administration of President Donald Trump has discouraged the green investment. Moreover, a recent rule has been passed by the US Labor Department, which has created more difficulties for the retirement plan fiduciaries to transfer their money into the ESG related funds…………………………

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