Applied Research
Does ESG integration impact the real economy?
This report commissioned by the Swiss Federal Office for the Environment (FOEN) offers insights into how ESG integration might impact the real economy and investigates to what degree the theory of change for ESG integration is valid.
ESG integration – the most used sustainable investment approach worldwide –means that environmental, social, and governance metrics and ratings are integrated into investment decisions.
Florian Heeb, Anne Kellers, and Julian Kölbel, former CSP researchers and authors of this report, conclude that ESG integration impacts the real economy “maybe a little bit.” “Maybe,” because ESG integration can drive change if all the following four conditions are met: if the underlying ESG metric is a valid measure of company impact, there are enough ESG investors, these investors implement a substantial tilt towards ESG, and there is a noticeable ESG premium. However, most likely only “a little bit” because the magnitude of the ESG premium remains unclear. Companies tend to take relatively small and careful steps to enhance their ESG profile, while major strategic shifts are not associated with ESG integration.
The report also offers recommendations to investors, asset managers, regulators, and policymakers on how to enhance the impact of ESG integration.
If you are interested to read the studies underlying this report in detail, please reach out to [email protected]
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