Savita Subramanian and a few of her colleagues from BofA Merrill Lynch Global Research, present a selection of their work on the Environmental, Social and Governance – or ESG - and the implications for US investors of these themes.
Our expectations are that ESG could play an important role in the investment process in the years to come, and these non-fundamental attributes of companies are too critical to ignore. Watch the video or read the full ESG report.
- ESG can be an effective signal of a company’s future price risk, return on equity and earnings risk.
- S&P 500 companies now hold more intangible assets, which can make evaluating them difficult. Analyzing ESG can provide some clarity.
- Millennials are a huge driver as they see impact investing and ESG as an important factor when making investment decisions. Given they could control roughly $60tn of market in flows over the next 2 decades it’s vital to consider.
- Investors and corporations appear to view ESG differently. In our May 2017 survey, 20% of responding investor clients cited using ESG, while a 2017 poll of investor relation executives suggests corporates believe only around 5% of their float is held by ESG-oriented investors