For ESG, a double lens provides sharper focus

There is little doubt that environmental, social and governance (ESG) investing will be the dominant theme shaping the financial industry and markets over the coming decade. Roughly one-third of all assets under management, or $35 trillion of managed assets worldwide, employ some form of sustainable investing strategy. Granular data is essential to capturing the diverse needs of an expanding investor base. What’s more, today’s ESG investors are far from uniform – and there is a growing need for data and analytics that address both "value" and "values".

To this end, a double materiality approach to delivering insight can certainly help. It is an approach that encourages ESG practitioners to consider not only how sustainability issues affect enterprise value, financial returns and cost of capital – or, in other words, company risk and performance – but also how such issues affect the society and environment in which a company operates.

Why double materiality?

 

By Rahul Ghosh, Managing Director, Moody’s ESG Solutions