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29 Apr 2019

John G. Ruggie

John Ruggie highlights positive contribution of ESG investing to advancing human rights

"ESG investing: Coming into its own - and not a moment too soon," 24 April 2019

[ESG investing]... now account[s] for nearly $31 trillion, or more than 25% of all assets under management worldwide... ESG funds perform at least as well as conventional funds, and probably better over the medium term. They also offer greater transparency... [S]hareholder primacy has contributed to a generation of workers’ income stagnation, political polarization, environmental degradation and an existential threat to the climate system, human rights violations in global supply chains, growing market concentration across the economy, greater frequency of financial crises, massive tax avoidance hollowing out public capacity, and even declining life expectancy in the world’s wealthiest country. Under the shareholder primacy doctrine, these are all considered externalities that lie beyond any business responsibility.

... [B]y combining environmental, social, and governance criteria with sophisticated financial analytics... [ESG investing] aims to provide the real, not fake, profile and profit of a company: one that manages risk and creates shared value... [F]or the S in ESG, internationally authoritative standards and high-level guidance exist... The intellectual and practical challenge for us all is to assist the traditional investment community in seeing connections it might not have imagined before: that human rights are the core of the S, and that the S is the core of the social sustainability of business itself.