Kiran Vasantham is Director of Investor Engagement, Jana Jevcakova is Managing Director of Corporate Governance APAC, and Mandy Offel is Manager of Corporate Governance at Morrow Sodali. This post is based on a Morrow Sodali memorandum by Mr. Vasantham, Ms. Jevcakova, Ms. Offel, and Patrick Wightman. Related research from the Program on Corporate Governance includes The Agency Problems of Institutional Investors by Lucian Bebchuk, Alma Cohen, and Scott Hirst (discussed on the Forum here); Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy by Lucian Bebchuk and Scott Hirst (discussed on the forum here); and The Specter of the Giant Three by Lucian Bebchuk and Scott Hirst (discussed on the Forum here).
Executive Summary
We are delighted to publish Morrow Sodali’s sixth annual Institutional Investor Survey (IIS), which canvasses the views and opinions of more than a quarter of the world’s assets under management [1] at a globally significant point in time.
Against the backdrop of the COVID-19 pandemic, Environmental, Social and Governance (ESG) impacts at listed public companies have been propelled to the forefront of investors’ minds as they assess the management of risks and opportunities, operational resilience, and shareholder value creation through a period of unprecedented market uncertainty and turbulence.
As is widely reported, the trend of capital inflows into ESG-oriented investing has exploded reaching a record high of USD 1.65 trillion in 4Q2020, up almost 29% from the third quarter. [2] The COVID-19 pandemic has contributed to the acceleration of ESG investing. Importantly, the pace of investment in sustainable funds is expected to continue to increase in the race towards a net zero carbon economy by 2050.
For this reason and following a global health crisis, the interest and appetite of investors, especially asset owners, to hold boards and companies accountable for their performance against “nonfinancial” ESG criteria is set to match, and in some cases exceed, performance against traditional financial measures.