The New Normal: ESG Investing in 2021 | The Responsible Investing Channel

By Carlo Maximilian Funk, EMEA Head of ESG Investment Strategy; Suzanne Smetana, ESG Investment Strategy & Research

In a year dominated by the COVID-19 pandemic, there has been a renewed focus from governments and companies on the need to address climate change and other sustainability challenges. For their part, many investors are integrating ESG and climate considerations across their portfolios in response to changing attitudes and regulations. Where will all this take us?

Read on for our five ESG themes for 2021 and why we see ESG emerging as the new normal.

1 ESG outlook: Europe marches forward; US, China and emerging markets
onboard European Union sustainable finance regulations are coming into force, while the
US and China are changing tone on climate change. Emerging markets will receive greater
attention on ESG issues.

2 Asset owners join companies and governments to reach net zero Driven by regulation
and changing sentiment, companies and investors are aligning to the low-carbon transition.

3 ESG data: Ever improving With increasing quality and availability of ESG data, comes
more specialisation — something that could enable investors to tackle wider (and more
focused) sustainability challenges.

4 Re-evaluating ESG-related tracking error Investors will rethink tracking error budgets
against standard benchmarks, in light of ESG integration considerations.

5 Engage or divest: The debate intensifies When a company fails to meet ESG expectations,
should investors divest or engage? This debate will come into the spotlight in 2021.

Read the full report here.

Originally published by State Street Global Advisors, 1/6/21