Topic: ESG Growth is Accelerating, Here Are 4 Major Reasons Behind It (Read 22 times)

ESG is the new talk in the trend, which is a blend of ESG rating, ESG investments, and ESG criteria. Even when ESG metrics are not usually part of mandatory financial reporting, companies are increasingly making disclosures in their annual reports or in standalone sustainability reports and investors are making investment decisions based on these.

What are ESG criteria?

Environmental, social, and governance (ESG) criteria are a set of parameters for company operations that socially conscious investors use to screen potential investments. Environmental parameters consider how a company performs as a steward of nature. Social norms examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance is for a company’s leadership, auditing, executive pay, internal controls, and shareholder rights.

What is ESG Rating?

How many standards a company is meeting from the ESG criteria is evaluated by some reputed organizations and based on that the company gets the rating, it is known as ESG rating. The ESG rating also measures a company’s exposure to long-term environmental, social, and governance risks. These risks include issues such as energy efficiency, worker safety, and board independence that have financial implications.

What is ESG Investment?

An investment that meets environmental, social and governance (ESG) criteria is known as an ESG investment. Investors these days use ESG ratings to complement the financial analysis and are getting a broader view of a company’s long-term potential.

4 Major Reasons ESG Growth is Accelerating

Flood risk, global warming, rising sea levels, demographic change, data security, and regulatory pressures are some of the major global sustainability challenges and they are presenting new risks for investors that may not have been noticed before. As companies face increasing complexity globally, investors are re-evaluating their traditional investment approaches. Here are the 4 Major Reasons ESG Growth is Accelerating.

1. Many things have changed

The world was already trying to deal with global warming and climate risks; increased regulatory pressure; social and demographic changes; and privacy and data security concerns. The Covid-19 pandemic made things difficult for the industries. The pandemic has affected companies’ exposure to ESG risks and their ability to manage them. Companies face increasing complications and more scrutiny if they are not adequately handling their ESG or environmental risk.

2. Better data and technology

Modern-day advanced technology such as artificial intelligence (AI), machine learning, faster computers, data extraction techniques, helps reduce our reliance on voluntary exposure from companies. Technologies like machine learning and natural language processing help us increase the timeliness and accuracy of the collection of data, investigation, and validation to provide dynamic data and financially relevant ESG awareness.

3. The modern generation of investors

The interest of Millennial investors around the world has already helped accelerate the rapid growth of ESG investments. In a 2018 survey, Bank of America Merrill Lynch said they could forecast asset growth of USD 20 trillion in US-dominated ESG funds alone over the next two decades. Investors have not understood that companies without sustainable plans and structure can’t survive long in this game.

4. Development in ESG initiative

Several institutions, including the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-Related Financial Disclosure (TCFD), the Global Reporting Initiative (GRI), set out to create standards and define materiality to facilitate the inclusion of these factors in the investment process. are working. ESG initiative is getting attention and that’s why a lot of development is happening in this sector.

However, One project that is on its way to encourage the world for faster ESG adoption is RICHMINT DAO. The project is introducing and universal and standard ESG criteria and rating system. This project will help the investors to access the ESG rating and report of a company easily which will result in more ESG investment.

The project with blockchain will also encourage the companies to try their hard to meet the ESG criteria so that they can get good ESG ratings resulting in better ESG investments. Check the website and participate in ongoing token sales to seize all the opportunities and help the project to become a success.