Volume & Velocity
Those may well be the key characteristics of developments in corporate sustainability and in sustainable investing in the year 2018.
Linda-Eling Lee, Global Head of Research for MSCI’s ESG Research Group and her colleague Matt Moscardi (Head of Research Financial Sector, ESG) this week described what they are projecting in the traditional early-in-the-year setting out of key ESG trends to watch by the influential MSCI ESG team:
Bigger, faster, more – that’s how Linda describes the “onslaught of challenges happening soon and more dramatically that many could have imagined” in the corporate sector” (including policy, technology, and climate change as key factors).
Investors (in turn) are looking for ways to better position their portfolios to navigate the uncertainty of the 2018 operating environment in the corporate sector.
As the “heads up” for investors and companies– the five key 2018 trends projected by MSCI’s ESG researchers/analysts:
- Investors will be using ESG “signals” to navigate the size/shape of the Emerging Markets investment universe to pick the winners for portfolios.
- The first steps are coming in “scenario testing” for climate change (this is systematically looking at risks emanating from company carbon footprints across asset classes, with short- and long-term transition scenarios).
- The fixed-income universe will see acceleration (velocity) with the alignment of ESG frameworks by investors across all asset classes.
And this is very important for the corporate sector:
Investors are looking beyond the growing volume of corporate disclosure and reporting for data.
Keep In Mind:
65% of a company’s rating by MSCI is based on
data sources beyond the corporate reporting!
MSCI sees 2018 as the Year of the Human – it’s about human talent, talent, talent! That is, what companies do to help in the transitioning to new working environments (with the changes brought about by automation, AI, robotics) that will be factored into the analysis of public companies by the MSCI ESG team, and measured over time (for outcomes).
Already, at the Davos meeting this week, major global firms in IT are creating an initiative to “tech-reskill” one million people to meet the global skills gap challenge inherent in the “Fourth Industrial Revolution” (firms are Cisco, Accenture, CA Technologies, HP, Infosys, Salesforce, SAP, Tata Consultancy, others).
What we think company managements / boards should expect in the “volume and velocity” context: many more investors (the volume / especially large fiduciaries) are embracing comprehensive ESG factors in their analysis and portfolio management approaches with a faster uptake of this trend among the mainstream elements of the capital markets players (the velocity).
We’re presenting here more details on the MSCI trends forecast and important developments at the start of the year 2018 that will shape the operating environment throughout the year – and beyond! Read the brief here!
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The full and original article can be viewed on Governence and Accountability Institute (GA-Institute.com)
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