Before COVID-19 took the world in its grip a year ago, the tailwinds behind the global sustainability movement was already pushing its skeptics into a corner. Global finance’s emphasis on environmental, social, and governance (ESG) criteria as a means of valuing companies, real estate, and investment performances was going mainstream, with climate risks being adopted by insurers, regulators eying the gender and racial makeup of corporate boards, and skeptics sounding a lot like those who once insisted the moon was made of Swiss cheese.
Studies consistently showed portfolios heavy with firms that scored well on sustainability metrics were outperforming expectations. Most of all, the historic and ongoing transfer of wealth from values-neutral boomer parents to Generation X and millennial children saw capital piling into ESG funds, validating sustainability goals as a means of sorting the good from the bad in society, not just on ethical and moral grounds but in terms of investor returns as well.
