Sustainable investment is in the focus of attention of large fund managers. A trend that is driven by public sector initiatives to achieve the goals of the Paris Agreement and the Sustainable Development Goals.
On the part of investors, including the incorporation of climate transition factors in investment decisions, there has been strong growth in the use of ESG approaches: A (environmental), S (social) and G (corporate governance).
At the same time, ESG investing has become a leading form of sustainable financing for long-term value and alignment with society’s values, and has evolved from its earliest stages of development to mainstream investment.
The environmental score of the “A” pillar of the ESG rating is increasingly used as a tool to align the investments with a low-carbon transitionand in principle could help uncover valuable forward-looking information on companies’ climate transition risks and opportunities.
In addition, a number of financial market products and practices have emerged to align capital flows with the low-carbon transition. These cover instruments for issuers, third-party ratings, principles and guidanceas well as index and portfolio products to help channel funding to entities in transition, and better price transition risks and opportunities.