It has been impossible to ignore the increasing focus on environmental, social and governance factors in financial management.

Many individuals have held deep-seated principles regarding the environmental and social impacts of the financial services sector. However, the mainstream acceptance of ESG as a legitimate tool within financial institutions has been a relatively recent phenomenon.

Indeed, then-UN secretary general Kofi Annan sparked the initial ESG flame in 2004. Annan wrote to more than 50 chief executives of major financial institutions, inviting them to join an initiative to find ways to integrate ESG into capital markets.

This initiative was backed the following year by a report entitled Who Cares Wins by Ivo Knoepfel. The report made a case that embedding ESG initiatives into financial markets would result in strong financial benefits for companies and investors alike, while contributing to a more sustainable future.

Trends indicate that ESG-tailored funds are outperforming their non-ESG counterparts.
From there, financial institutions have been compelled to take such factors seriously. And, given the recent escalation of climate change, the financial sector has been clamouring to ramp up sustainability efforts.

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