Launch of our new ESG Equity Market Monitor
Updated: Sep 4, 2019
Leaders Arena's ESG Equity Market Monitor quarterly report tracks SRI investments in listed companies, a must-read for Investor Relations Officers' planning ESG communication and engagement with responsible investors
Continued growth in the amount of capital allocated to companies managed by Responsible Investors (RI) highlights the growing importance of integrating the environmental, social and governance (ESG) aspects of a company’s performance in its regular communication with institutional investors.
Responsible investors seek to fully understand the value and impact of a company well beyond its short-term financial performance, and engage with companies to improve particular aspects of their ESG performance.
For Investor Relations professionals and corporate leaders, this represents a tremendous opportunity to integrate their companies’ sustainability story with their equity stories. Reaching out to this qualified audience of RIs allows companies to attract and retain long-term-oriented capital and gain invaluable feedback to help them improve their strategic direction during the process.
This group of investors widens the scope for dialogue between companies and the market. The traditional divide between active and passive investors, which IR used in the past to exclude passive investors from a company’s active outreach programme, is increasingly becoming outdated. Instead, when it comes to participating in this ESG dialogue, both active and passive investors welcome the opportunity to talk to issuers.
How much capital can we truly categorise as ‘SRI’?
In the absence of a universal definition of what constitutes sustainable investments, and despite the lack of enforceable standards for sustainable investing, Eurosif, the US SIF and other national Sustainable Investment Forums resort to biennial investor surveys to give us a glimpse into this heterogenous market. The latest biennial surveys published in November 2016 by Eurosif and US SIF suggest a steady growth in all SRI strategies. According to their data, sustainable investments would have reached USD 11tn in Europe and USD 8.7tn in the US.
The United Nations-backed Principles for Responsible Investments estimates that its signatories manage USD 59tn globally.
However, Investor Relations professionals will want to understand how much of that capital follows the more holistic ESG integration investment processes applied to equity markets, the approach which favours the richest form of dialogue between companies and their investors. Unfortunately, these institutions are unable to estimate this focus market.
Leaders Arena closely follows the investment activity of nearly 10,000 institutional investors worldwide in order to determine the core component of responsible equity investments. We monitor the effective ESG integration into their equity-investment decision process, proxy voting activity, active engagement with companies and their own public research and disclosures. This enables us to provide a more realistic view of this market and a vital tool during the planning stages of a company’s ESG communication plan with the markets.
Based on this methodology, the data from Leaders Arena supports Investor Relations professionals conducting extensive country and sector benchmarking exercises.
Please find the link to our latest study below, and don’t hesitate to contact us if you have any questions or need our support.