New Horizons: Navigating ESG in 2022

Responsible investment trends

ISS ESG the responsible investment arm of Institutional Shareholder Services Inc released a report identifying the key global trends responsible investors will be focusing during 2022.

The key global themes and trends for ESG investors in 2022 cover topics included under three interrelated areas:

  • Planetary boundaries: Risks that arise from the degradation of ecological systems including the impacts of climate change, biodiversity loss, ecological collapse and resource depletion, including ocean acidification and water consumption/depletion, air pollution... Some key themes:

- Looming Water Crisis: Institutional investors can mitigate water risks across their investment portfolio by identifying industries and business activities that depend on or greatly impact water resources, and actively engage in management decisions to reduce negative impacts.

- Biodiversity loss: Food producers (mostly through their raw materials supply chains), hydropower dam operators, pesticide manufacturers, mining and construction companies, are frequently involved in allegations associated with biodiversity depletion.

  • Stewardship: Risk related to corporate governance and market integrity, including data privacy and technological regulation, cyber risk, lobbying, corruption and accountability, climate change measurement and reporting. Some key themes:

- ESG data integration into the investment process: main challenge to put ESG into the mainstream of the investment process.

- Climate Litigation: Number of climate litigations has grown considerably (1,550 cases in 2020 vs the total 884 cases until 2017).

- Responsible investment regulation: Compliance with regulation that is gaining relevance in all geographies.  

  • Inclusion: Systemic issues that cause or relate to wealth and resource disparity; risks to labor and human rights; cultural and racial prejudice; gender- and age-based discrimination… Some key themes:

- Gender pay Gap: Investors will ensure that this indicator improves for female employees.

- Labor and Supply Chain: global working conditions across the value chain will be in the spotlight.

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