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A Blueprint for Corporate Growth
Investment Landscape and Sustainable Strategies
Investment professionals, including fund managers and family offices, typically rely on preferred indices for selecting corporate investments. They closely monitor indices like the S&P 500, Dow Jones, and Nasdaq. Many individuals also have preferred stock analysts who utilize more flexible criteria, with platforms like Seeking Alpha and the Motley Fool often captivating audiences.
Unveiling the Power Players: Key ESG Indices
Which indices are steering more than $8.4 trillion in total US-domiciled assets under management (AUM) using sustainable investing strategies? SRI investing accounts for 13%—or one in every eight dollars—of the total U.S. assets under management, as reported by USSIF.org.
Important indices which rank companies based on SRI, CSR (corporate social responsibility) and ESG (environment, social, governance) criteria include:
- Bloomberg Barclays MSCI ESG Indices
- CSRHub
- FTSE 4 Good
- Dow Jones Sustainability Indices (DJSI)
- Morningstar
- NasdaqCRD Global Sustainability Index (NQCRD)
CEOs, CFOs, and VPs of investor relations must pay attention to how their companies rank on these and other indices because investors – institutional and private – watch these closely. There are mutual funds and ETFs based solely on these.
Alternative Investments and ESG Focus
Many sustainability portfolios rely heavily on these indices, and other professional portfolio managers such as Pax World, Domini and Calvert create their indices which are then used by private investors.
In 2022, the US SIF Foundation reported 383 alternative investment vehicles, such as private equity and venture capital funds, hedge funds, and real estate investment trusts (REITs) or other property funds, overseeing $762 billion in assets under management (AUM) with a focus on ESG (Environmental, Social, and Governance) criteria. Many of them are available from traditional investment houses such as Goldman Sachs, Merrill Lynch, and UBS.
Rewards for ESG Excellence: Insights from CSE Research
Companies finding their way onto these indices are rewarded. For the seventh consecutive year, the Center for Sustainability and Excellence (CSE) unveils groundbreaking insights from its annual research on ESG Reporting Trends. This year’s study meticulously analyzed the prevailing ESG trends among over 200 companies listed in the FT 500, spanning the United States and Canada. CSE research provides a deep dive into the dynamic relationship between profitability and the prevalent ESG strategies and ratings across 21 sectors, highlighting the practices adopted by the most profitable entities within each sector.
Furthermore, CSE Research extends to a nuanced examination of how ESG criteria (non-financial factors) correlate with financial outcomes, uncovering distinctive practices that contribute to superior financial performance over time. Among the key findings, the emphasis on material issues, integration of stakeholder feedback and preferences into ESG strategies, thorough ESG reporting, and a commitment to achieving bold quantitative targets emerged as common denominators among organizations that excel financially.
Unlocking Higher Rankings: CSE Sustainability (ESG) Leadership Workshop
Sustainability rankings reach beyond the CEO, CFO, and Investor Relations. Sustainability concerns permeate the corporate structure. Supply Chain risk and management is only one of many key elements reaching beyond finance and toward Operations. With SRI investments often including exclusionary screening, COOs are affected by investment policies related to conflict-risk countries. Sustainability rankings take these and many other criteria, new to traditional corporate thinking, into account.
Want to learn more about how you can leverage your sustainability efforts for higher rankings? Attend the Center for Sustainability and Excellence (CSE) Sustainability (ESG) Leadership Workshop for C-Suite Executives, May 9-10 & 13, 2024. CSE specializes in global sustainability consulting, research, and training. Clients include governments, NGOs, and Fortune 500 companies. CSE is accredited by CMI and is a GRI organizational stakeholder.
CSE C-suite ESG trainings regularly max out. Reach us on time at [email protected]
