Beyond Box-Ticking: How Sustainable Finance is Driving Long-Term Returns for Responsible Investors

Sustainable finance has come a long way from its early days as a niche practice. Today, many asset managers recognize that they have a responsibility to consider ESG metrics as part of their capital allocation and management criteria and that companies which address these pressing issues will realize greater business opportunities in the future, leading to higher returns for their long-term shareholders.

Asset managers are responding to these challenges by turning to investment strategies that benefit from better-performing firms on TSI issues, such as best-in-class and thematic investing, as well as impact investing, including low carbon indices and green bonds. But to truly translate this investment strategy into short- and long-term tangible financial outcomes for shareholders, we must first have a solid understanding of the steps companies must take to increase the impact and sustainability of their business models.

Sustainable finance is about more than just ticking boxes or checking off a list of ESG criteria. It's about taking a long-term view of investment performance, and recognizing that the most sustainable and resilient companies are those that are best positioned in a rapidly changing world.

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This article was first posted on my LinkedIn on February 27, 2023