ESG Integration: How are social issues influencing investment decisions?

Author: Principles for Responsible Investment, Published on: 16 May 2017

Integrating ESG factors into analysis of listed equity investments is the most widespread responsible investment practice in the market today. Recognising that social issues are inherently more qualitative, investors often find it challenging to integrate them as they are not as easy to quantify. As a result, it can make it more difficult for investors to showcase the financial impact social issues have on risks and impacts for long-term investments. (...)

[The UN supported Principles for Responsible Investment's guide describes the stages of ESG integration, methods investors can use to integrate social issues into listed equity investments, and case studies demonstrating] that practitioners are successfully integrating social issues into fundamental analysis and that investors can treat social factors in the same way as any other financial issue (...).

Social factors are also material to many sectors and industries. [Material social factors addressed in the case studies include human capital management, minimum wage, health and safety, health and well-being, workforce culture, gender diversity, supply chain standards, local community relations, litigation and reputational risk, and data security breaches.]

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