ESG Investing: trends, impacts and challenges

Abstract

The report has tried to look at ESG and various factors concerning ESG investing. ESG as a phenomenon has gained wide prominence in the recent times, especially post pandemic. Investors are increasingly incorporating the ESG factors into consideration while taking investment decisions. This report tries to look at what is ESG and how ESG investing has evolved across sectors and geographies. Further, it has also assessed whether ESG investing has any impact on financial performance or environmental performance. However, while investing investors also look at ESG scores/ratings of different issuers but these ratings differin terms of frameworks used by rating agencies and are not standardised. A lot of nonquantitative factors are involved and hence subjectiveness is also involved. We have also looked at relationship between ESG ratings and Valuation multiples as well as funding. Finally, it can be said that the COVID-19 has accelerated the pace of adoption of ESG criterion in decision making process and ESG assets are on track to exceed $50 trillion by 2025, which is more than a third of the projected global assets under management.