Institutional investor calls for enhanced transparency regarding portfolio companies’ identification and management of evolving sustainability risks gained considerable momentum over the past year, as reflected in shareholder voting patterns during the 2017 proxy season, developments in investor “stewardship” codes and a pronounced increase in “voluntary” corporate sustainability reporting. We expect this trend to continue, or even accelerate, during the 2018 season.
What is Sustainability and How Much Does it Matter to Investors?
The term “sustainability” is generally understood to mean environmental, social and governance (ESG) issues that can affect investment and/or proxy voting decisions associated with corporate stock ownership. It includes a host of such diverse topics as climate change, labor relations, supply-chain human rights (e.g., use of slave labor by suppliers) and corporate political contributions and lobbying activities (to name just a few).