The ABC of ESG - environmental, social and corporate governance

07 May, 2021

Responsible investment (RI) is as an investment approach that includes environmental, social and corporate governance (ESG) factors and broader systemic issues along with active ownership (stewardship).

The new regulatory requirements for UK Pension schemes announced by Guy Opperman, Minister for Pensions and Financial Inclusion, in January 2021 will make the UK the first major economy to require climate risks to be specifically considered and then reported on by pension schemes.

 

This paper is a great introduction to ESG and aims to provide an education on responsible investment approaches, regulatory direction of travel and fiduciary duty, relationship between responsible investment and performance and potential action plans for investors.

 

We define responsible investment (RI) as an investment approach that includes environmental, social and corporate governance (ESG) factors and broader systemic issues — for example, climate change and sustainable development - along with active ownership (stewardship).

 

These considerations can have a material impact on financial performance, and their inclusion is more likely to lead to sustainable investment outcomes, such as a greater ability to sustain pension payments in the future.

 

Mercer’s own investment beliefs state that ESG factors can have a material impact on long-term risk and return outcomes. We also believe:

  1. Taking a broader and longer-term perspective on risk will lead to improved risk management and new investment opportunities.
  2. Climate change poses a systemic risk given the low-carbon transition and physical impacts of different climate outcomes.
  3. Active ownership provides opportunities for investors to enhance the value of companies and the market.


To find out more, please download the report below.

Alternatively, if you have any questions on how Mercer can help you on your journey to sustainable investment, please check the box in the contact form below to speak with a Mercer expert.

Download “The ABC of ESG” Report

Please complete the form below.

*Required Fields