Markus Müller on the Importance of Global Sustainability Standards
Photograph by Isabella Sheherazade Sanai
The pandemic has accelerated the rise of environmental, social and governance (ESG) investing. However, argues Markus Müller, we must improve global standards continually if ESG is to fulfil its promise of driving economic growth while having a positive impact on the planet
Markus Müller
The coronavirus pandemic has made us acutely aware of risks to our existence and how fragile the global economic system is. Many are making the SARS-CoV-2 pandemic part of the reason why ESG has risen rapidly to the top of the global agenda, moving from rhetoric and ambition to action. At the same time, the many facets of ESG are being discussed and examined across a multitude of investment institutions, to establish what it really means and whether it serves a purpose at all. In my view, ESG prompts a simple question about why and how we do things, as individuals, as investors and as companies.
ESG originally developed from institutional investors screening out negative risks in investment targets. Today, ESG is much more than a combination of investment ratings and exclusions. With the goal of sustainability as our objective, ESG offers a way of understanding and quantifying the non-financial dimension of economic activity and of avoiding the dangers of a ?submerged iceberg?.
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This means identifying where the risks lie and developing innovative mitigation strategies. Mid- to long-term risk for an investor c...
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