Environmental, Social, and Governance Issues
Analysis of environmental, social and governance (ESG) issues is an important part of the investment process. CFA Institute encourages all investment professionals to consider material ESG factors when making investment decisions. The Institute is also strongly focused on developing educational tools on ESG for its members and for the broader investment management industry. Below are the most notable ESG posts selected by the ARX Editorial Team.
Select "Research" in the upper left-hand corner of the page to find more ESG content in ARX's repository of more than 3000 posts.
Blended Finance: Catalysing Bankable Nature Solutions
Bankable Nature Solutions aim to reduce negative pressure on ecosystems, drive sustainability, and generate positive returns. Through blended finance, they create an environment for private investors to adopt a financially self-sustaining approach.
11 December 2020 | Thiaga Nadeson, Adam Ng, Katherine Lim, Siti Rizkiah, Norizan Mohd Mazlan, Sharon Lo, and Belinda Lip
Korean Listed Companies 2019 ESG Incident Report
This report is based on Who’s Good ESG Incident Analysis, powered by artificial intelligence algorithms and news data from 90+ local and national news media providers in Korea. It provides an overview of the corporate ESG incidents in 2019 for Korean listed companies.
11 December 2020 | Who's Good: Duk Chan Yoon, Maxim Nam, Vasundhara Dehiya, Soo Young Kim, Ju Yeon Lee, Emily Kim
Does ESG Affect Fundamentals?
ESG investing market has shown significant growth over the past decade, and it continues to grow rapidly. It has been proved that systematic analysis of ESG incidents in addition to using traditional ESG scores improves portfolio's returns.
11 December 2020 | Who's Good: Maxim Nam
Climate Finance Markets and the Real Economy: Sizing the Global Need and Defining the Market Structure to Mobilize Capital
The report calls for coordinated and concerted action by the public, social, and private sectors to significantly scale the Climate Finance Market Structure (CFMS) over the next three decades.
7 December 2020 | GFMA, BCG
WEBINAR: ESG Integration in Fixed Income in Practice
In this webinar, second in the series on ESG in credit, we have invited investment managers and asset owners to provide real life examples of how ESG is integrated into fixed income in practice, such as ESG evaluation methods, performance measurements, reporting practices and the design of ESG investment products.
17 November 2020 | CFA Institute ARX | Video: 1 hr 11 min.
Is Carbon Risk Priced in the Cross Section of Corporate Bond Returns?
We study the pricing of a firm's carbon risk in the cross-section of corporate bond returns. Contrary to the "carbon risk premium" hypothesis, we find bonds of firms with higher carbon emissions earn significantly lower returns.
12 October 2020 | Tinghua Duan, Frank Weikai Li, Quan Wen
Investing in Water for a Sustainable Future
The world is facing water shortages. Companies that address the crisis represent long-term opportunities. The S&P Global Water Index provides a liquid, diversified exposure to companies involved in water-related business activities.
8 October 2020 | S&P Dow Jones Indices: Tianyin Cheng, Claire Yi
Integration of ESG in Valuation – A Summary
With ample empirical evidence on how ESG factors affect corporates’ operating and financial performance, ESG has become a factor in investment decision making, presenting material risks and opportunities.
14 October 2020 | CFA Society India: Labanya Prakash Jena
ESG-Screening and Factor-Risk-Adjusted Performance: The Concentration Level of ESG-Screening Does Matter
The benefit of ESG-screening outweighs the cost of increasing diversifiable risk until about 50% of low score funds are excluded from the eligible universe. Investors need to treat the concentration level of ESG-screening as a search parameter.
29 October 2020 | Ick Jin
ESG Taxonomy for Securitized Products
Investors increasingly recognize the value of incorporating sustainable investment principles in financial analysis, but integration of these within fixed income has typically lagged behind equity due to complexity and data reliability.
28 October 2020 | FTSE Russell: Katie Prideaux, Vlad-lonut Ene
How to Build a Climate-Adjusted Government Bond Index
As climate risks accelerate, they are increasingly gaining attention from government bond investors, However, there remains a lack of climate-based investment products in fixed income, particularly in sovereigns.
28 October 2020 | FTSE Russell: Douglas Bourne Analyst, Lee Clements, Guillaume Emin, Thomas Lorans
Climate Change Concerns and Mortgage Lending
We examine whether beliefs about climate change affect loan officers’ mortgage lending decisions. We find that loan officers approve fewer mortgage applications and originate lower amount of loans in abnormally warm weather.
6 October 2020 | Tinghua Duan, Frank Weikai Li
Climate Change Governance: What can shareholders and bondholders do?
Four out of the top five risks facing the world today are related to climate change. They are recognized as material to the financial system. Uncontrolled climate change can severely affect financial performance of corporates in the coming decades.
1 October 2020 | Labanya Jena, CFA
An Introduction to Sustainable Investment
What is sustainable investing? Who uses is? Why is interest in it on the rise? What impact does a sustainability focus have on performance? How can investors implement a sustainable investment portfolio?
22 September 2020 | FTSE Russell
The S&P 500 ESG Index: Defining the Sustainable Core
The S&P 500 ESG Index, launched in April 2019, incorporates ESG values while offering benchmark-like performance. It includes over 300 of the original S&P 500 companies and reflects many of the attributes of the S&P 500.
22 September 2020 | S&P Dow Jones Indices: Mona Naqvi, Reid Steadman, Daniel Perrone
Sizing the Green Economy: Green Revenues and the EU Taxonomy
We explain the need for green taxonomies and summarize the approaches taken by the EU Taxonomy and FTSE Russell’s GRCS. We also explain how a Green Revenues data model can provide a stepping stone to comply with the EU Taxonomy regulation.
22 September 2020 | FTSE Russell: Jaakko Kooroshy, Lily Dai, Lee Clements
WEBINAR: Improving Transparency and Comparability of Investment Products with ESG-related Features
CFA Institute has issued a Consultation Paper on the CFA Institute ESG Disclosure Standards for Investment Products - a new, voluntary, global industry standard to establish disclosure requirements for investment products with ESG-related features.
21 September 2020 | CFA Institute: Chris Fidler, Deborah Kidd, Mary Leung, CFA | Video: 1 hr 28 min.
Passive Investment: Exposing Investors and the Earth to Climate Change Risk
A fully passive investment strategy is indifferent to climate change risk. Through carbon-neutral and or less-carbon intensive rule-based portfolio, stewardship, constant engagement, and proxy voting the climate change risk can be better managed.
10 September 2020 | Labanya Prakash Jena, CFA
WEBINAR: Timber, Pulp, and ESG Risk
This webinar helps financial practitioners understand the main ESG risks posed by the timber and pulp industry. The speakers discuss the challenges and opportunities they meet in the implementation of sustainable planting and forest management practices.
1 September 2020 | CFA Institute, ZSL SPOTT, CFA Society Singapore | Video: 1 hr 3 min.
The S&P/ASX 200 ESG Index: Integrating ESG Values into Core in Australia
The S&P/ASX 200 ESG Index is designed for investors wishing to integrate ESG factors into their core investments, while not straying far from the overall profile of the S&P/ASX 200.
25 August 2020 | S&P Dow Jones Indices: Daniel Perrone
Credit Risk for Unsustainable versus Sustainable Businesses
There is increasing evidence of higher credit risk for unsustainable, low-ESG, high-fossil fuel businesses, and a lower credit risk for sustainable, high-ESG, clean, regenerative, and renewable businesses. Investors, banks and regulators take note.
10 August 2020 | David Maywald
An Evolving Process: Analysis of China A-share ESG Ratings 2020 / A股上市公司ESG评级分析报告2020
A study of more than 1,700 listed companies based on SynTao’s own methodology analyzes their 2018-2020 ESG rating results, with a focus on A-share companies represented by the CSI 800 index constituent stocks.
近年间，我国监管部门、投资机构、上市公司及行业协会对ESG的重视日益提升，根据中国证券投资基金业协会调查统计，有87%的投资机构对ESG投资有所关注。上市公司的ESG表现成为市场在衡量企业投资价值时的重要维度。基于商道融绿 STαR ESG数据库及ESG风险雷达系统，我们对数据库收录的超过1700家上市公司进行分析，并重点系统分析以中证800指数3成分股为代表的A股上市公司2018-2020三年间ESG评级结果。
6 August 2020 | SynTao Green Finance - 商道融绿
WEBINAR: ESG in Fixed Income
Webinar Series: ESG in Credit - Part I, presented by CFA Institute and Fitch Ratings
The growth of ESG investing has created a demand for ESG products and services that meet the needs of asset owners and investment managers. Initially focused on equities, investors are nowalso looking at the much bigger fixed income universe, which includes corporate bonds, public finance, project finance, and structured debt. How do ESG factors affect credit risk and how is this reflected in credit ratings?
4 August 2020 | Mervyn Tang, CFA; Mary Leung, CFA | Video: 1 hr 4 min.
Integrating Sustainability and Responsible Investment into Asset Allocation
High-ESG assets having measurably lower risk, as well as historically higher returns. Sustainable Investment has practical applications for all aspects of AA. This presentation reviews current practices, and significantly expands into new territory.
1 August 2020 | David Maywald
Corporate Social Performance and Credit Risk
The financial sector can play a role in aligning private sector incentives with sustainable development, without incurring additional financial risk or sacrificing returns, but the CSP-credit risk relationship is dependent on country sustainability.
29 July 2020 | CFA Society Malaysia: Dr Lutfi Abdul Razak, Prof Dr Mansor H Ibrahim, Dr Adam Ng
WEBINAR: ESG Disclosure Practice and Dialogue
The growing recognition of the impact that material ESG factors have on companies’ long-term prospects has resulted in the strong demand for quality ESG reporting from investors, stock exchanges and regulators. Do companies face any challenges in complying with these reporting standards? What strategic benefits do they see in producing insightful and top-quality reports? Are investors able to articulate the ESG information disclosed?
28 July 2020 | CFA Institute, GRI, Business Environment Council
360° of Climate – Indices for Every Objective
As the need to decrease the risks and impacts of climate change becomes urgent, S&P DJI’s climate change indices help investors reach climate objectives, such as divestment, decarbonization, de-risking, and holistic, science-based 1.5°C alignment.
15 July 2020 | S&P Dow Jones Indices: Jaspreet Duhra
China's New Green Catalogue: Harmonizing Standards
China’s regulators have published a consultation version of their updated “Green Bond Endorsed Project Catalogue”, which harmonizes domestic standards with international ones, expands the range of qualifying projects, and adds technical detail.
10 July 2020 | SynTao Green Finance: GUO Peiyuan, LIU Yujun, WU Yanjing, Grace GUAN
Does Your Board Pass the ESG Acid Test?
ESG is the ultimate business-critical issue, yet do board-members know enough about the material ESG aspects of their business and do they have the right approach, strategy and reporting in place to fulfil their increasing obligations.
1 July 2020 | The Purpose Business: Fiona Donnelly
Accelerating Green Finance in India: Definitions and Beyond
Green finance can play an important role in making India’s economy resilient to the impact of climate change. This can be achieved by collaborative actions that accelerate green capital flows, beginning with an agreed definition of green finance.
1 July 2020 | Climate Policy Initiative: Labanya Prakash Jena, Dhruba Purkayastha
WEBINAR: Green Finance Development in China
As China actively pursues ecological and sustainable development, green finance serves a core function in the country’s financial ecosystem. Dr. Ma Jun, director of the Center for Finance and Development at Tsinghua University, chairman of China Green Finance Committee, and a member of the Monetary Policy Committee of the PBOC, and Rhodri G. Preece, CFA, head of industry research at CFA Institute, discuss green finance development in China.
29 June 2020 | CFA Institute | Video: 52 min.
WEBINAR: ESG Investing Post-Covid 19
MioTech's co-founder Jason Tu compares shareholder value vs. social value, explains how technology and data readiness improves ESG adoption, and discusses regulatory drivers of sustainable investing in Greater China.
10 June 2020 | Jason Tu, Mary Leung, CFA | Video: 1 hr 9 min
Financing India's Renewable Energy Sector: Accessing Capital from Pension and Insurance Funds
The paper examines the investment traits of India's renewable energy sector and assesses the alignment of institutional investors' objectives with their investment profiles, focusing on pension funds and insurance companies.
10 June 2020 | Labanya Jena, CFA
The Case for Mandatory Separation of Chairperson and CEO Roles in India
As the implementation of SEBI's mandated separation of the roles of chairperson and CEO in Indian companies is postponed, we asked members of CFA Institute in India and CFA Society India for their views on this issue. This report provides the results of the survey.
23 May 2020 | CFA Institute, CFA Society India: Sivananth Ramachandran, CFA
WEBINAR: How Green Are Green Bonds?
A review of green bond regulations in ASEAN with a focus on their alignment with global standards and on the progress Thailand, the Philippines and Malaysia are making in the development of their green bond markets.
21 May 2020 | Mary Leung, CFA; Yoon Mee Yeong, CFA; Juliette Macresy, CFA; Cedric Rimaud, CFA | Video: 1 hr 8 min
Shareholder Activism in Japan: How traditional corporate culture is being challenged
Shareholder activism is on the rise in Japan, but has not yet developed to the same degree as in the US or Europe, where investors are increasingly focusing on ESG issues. In Japan it is mainly concerned with governance and financial performance.
21 May 2020 | Nga Pham, PhD, CFA
Sustainable Finance in Asia Pacific: Regulatory State of Play
An overview of developments in sustainability in major jurisdictions of Asia Pacific and international policy environment examines practical implications for industry participants and policymakers, and calls for international coordination.
13 May 2020 | ASIFMA, Herbert Smith Freehills
ESG Disclosure in Asia: Key Findings from Hong Kong-Listed Companies
This webinar presentation includes a summary of research by CFA Institute on ESG disclosures in Asia-Pacific, and of a survey by BDO and PolyU SPEED on the performance of ESG reporting among Hong Kong-listed companies in 2018/19.
5 May 2020 | Piotr Zembrowski, CFA; Ricky Cheng; Dr. Artie Ng
Defining “Brown” Is Harder Than “Green” But Credit Implications Are Greater: ESG Credit Quarterly - Q1 2020
Fitch Ratings’ first ESG Credit Quarterly uses ESG Relevance Scores and broad research to capture current trends, such as the role of litigation in driving “E” and “S” changes, or physical risks spurring climate policy debate.
20 April 2020 | Fitch Ratings: Mervyn Tang, Andrew Steel
ESG in Credit 2020: White Paper
Interest in the application of ESG to debt capital markets is growing, as asset owners demand reports on ESG performance of their investments. Fitch’s ESG Relevance Scores provide insight on how ESG factors affect credit risk.
17 April 2020 | Fitch Ratings: Andrew Steel, Mervyn Tang
What Next for Sustainability? The Post-Pandemic Corporate Agenda
The post-pandemic recovery may present an opportunity to address long-standing challenges of sustainable development, such as inequality and climate change, and drive companies to take a more comprehensive approach to environmental and social issues.
23 April 2020 | Carbon Care Asia (CCA)
WEBINAR: ESG Risks in the Natural Rubber Sector
Natural rubber industry is dominated by smallholders who often are unable to absorb the costs of sustainable practices. The sector to be overlooked by global sustainability initiatives. Negative social and environmental impacts present a risk to downstream companies and investors.
16 April 2020 | CFA Society Singapore, CFA Institute Asia-Pacific Research Exchange | Video: 1 hr 8 min.
Using Corporate Reporting to Strengthen Sustainable Development Goals: Recommendations for National Policy Makers
The report presents five recommendations for governments and other policy makers on how they can use corporate reporting to strengthen the progress towards Sustainable Development Goals at the national level.
8 April 2020 | Global Reporting Initiative (GRI)
WEBINAR: Climate Change Integration in the Investment Process
Climate change presents a range of physical and transition risks for business and the financial industry. Investment professionals need education and tools to analyse and mitigate these risks. CFA Institute's Matt Orsagh presents an overview of the topic, followed by a panel discussion of industry experts in Asia-Pacific.
9 April 2020 | CFA Institute | Video: 1 hr 11 min.
Business Engagement in National Contributions under the Paris Agreement: Policy Recommendations on the Role of the Private Sector and Reporting
An analysis of the first round of Nationally Determined Contributions (NDCs) under the Paris Agreement includes recommendations for policy makers and businesses, trends, lessons learned, and examples of good practice.
11 July 2019 | GRI, CDP
Growth of Sustainable Debt in Emerging Markets: Deepening Focus on ESG
Emerging market (EM) economies are particularly susceptible to ESG risks. Increased focus on ESG credentials and top-down policy support will remain important in driving the growth and development of EM sustainable finance.
17 March 2020 | Moody's Investors Service: Rahul Ghosh, Anne Van Praagh
Impact of Climate Change and Carbon Transition Risks on Credit: Scenario Analysis
Moody's expects a more pronounced decarbonization trajectory and more frequent and volatile extreme weather in the future. Given a wide range of possible outcomes, we use scenario analysis to help assess the credit impact for rated issuers.
10 March 2020 | Moody's Investors Service: James Leaton, Brian Cahill
In Focus: Addressing Investor Needs in Business Reporting on the SDGs
"Business Reporting on the Sustainable Development Goals (SDGs)" is a collaborative effort of the Global Reporting Initiative (GRI) and the United Nations Global Compact. It aims to provide guidance to businesses and accelerate reporting on the SDGs.
18 July 2018 | GRI, PRI, the UN Global Compact
Sustainable Banking in ASEAN: Update 2019
2019 update of WWF’s annual assessment, which benchmarks major ASEAN banks’ ESG integration against a proprietary framework, reviews the sustainable finance landscape, and recommends ways for the ASEAN banking sector to drive sustainable development.
26 August 2019 | WWF: Chen Ted Kin, Jeanne Stampe, Naomin Tan
ESG Evaluation of SSE 50 Index Constituent Stocks on Epidemic Control
An analysis of a company’s behavior under an emergency such as the COVID-19 epidemic helps evaluate its resilience. The ESG Epidemic Control Valuation model developed by SynTao Green Finance serves as a supplement to the overall ESG assessment.
20 March 2020 | SynTao Green Finance
RESPOND - Resilient and Sustainable Portfolios
This report summarizes the analysis of 22 asset managers’ disclosures on their implementation of responsible investment (RI). It outlines how these asset managers disclose against WWF’s RI framework and how they can further push the frontier of RI.
27 January 2020 | WWF Singapore: Marie Gauthier, Keith Lee, Lauren Lynch, Lise Pretorius, Jeanne Stampe
Finding Gold in All That Glitters: Exploring Sustainability Bonds in Asia Pacific Region
A historical overview of the green, social, and sustainable bonds in Asia-Pacific region presents the challenges faced by sustainability-conscious international investors and solutions that may be helpful in navigating those challenges.
4 March 2019 | Solactive AG, Carbon Care Asia
Resilient and Sustainable Portfolios: A Framework for Responsible Investment
This report introduces WWF’s Responsible Investment Framework. It provides context around why the framework was developed, its uses and sheds light on the underlying indicators and sub-indicators the framework analyses.
30 April 2019 | WWF Singapore: Keith Lee, Jeanne Stampe, Ted Kin Chen, Lauren Lynch, Lise Pretorius
Asia Sustainable Finance Initiative: 2019 Annual Report
Based in Singapore, Asia Sustainable Finance Initiative (ASFI) is a multi-stakeholder forum that promotes best-practice, science-based sustainable finance across Asia. The Annual Report summarizes ASFI’s achievements since its launch in January 2019.
3 February 2020 | WWF Singapore
China Sustainable Investment Review 2019
A report by China Social Investment Forum and SynTao Green Finance presented at the 7th China SIF Annual Conference focuses on the sustainable investment practices of investment funds in China and reviews the country progress in ESG investment.
12 March 2020 | China SIF, SynTao Green FinanceDownload PDF >
WEBINAR: Using ESG Data to Simplify the Complex
As the interest in ESG investments continues to grow, data is critical to ESG portfolio construction. It can inform decision making and provide grater transparency. Data scientists explore the practical applications for investors.
4 March 2020 | S&P Dow Jones Indices: Steven Bullock, Jaspreet Duhra, Manjit Jus | Webinar: 58 min.Watch Webinar >
Top 10 Trends in Sustainable Investment in China 2020
Effects of climate change, materiality of ESG disclosures, product diversification, incorporation of ESG into fixed income, and Sustainable Development Goals as a product theme, are some of the new trends on China’s sustainable investing landscape.
12 March 2020 | SynTao Green Finance, China SIFDownload PDF >
VIDEO: How Is the Sustainable Investing Ecosystem Evolving?
The launch of futures on the S&P 500 ESG Index has expanded the ESG toolkit for market participants. S&P DJI’s Mona Naqvi joins CME Group’s Tim McCourt and DWS’ Luke Oliver to discuss. (Video: 10 min.)
9 January 2020 | S&P Dow Jones Indices: Mona Naqvi, Tim McCourt, Luke OliverWatch Video >
Sustainable Banking Regulations in ASEAN: Raising the Bar
In this report, WWF assesses sustainable banking regulations and guidelines issued by financial regulators or banking associations in ASEAN countries, and looks at whether banks headquartered in these countries meet these increasing expectations.
9 December 2019 | WWF-Singapore: Sylvain Augoyard, Ted Kin Chen, Jeanne StampeDownload PDF >
Shrinking Plastics: Implications of Tighter Regulations on the World Industry
If manufacturers ignore coming regulatory changes, companies with large exposure to commodity-type plastic products are more vulnerable to the risks caused by the decelerating growth in plastic demand and tougher regulatory environment for plastics.
27 September 2019 | WWF-Hong Kong: Peter Rawle, Jean-Marc Champagne, Sam HiltonDownload PDF >
Asia’s Consumer Goods Sector: The Missing Link in Sustainable Palm Oil Demand
With 60% of global consumption, the battle over sustainable palm oil will be won or lost in Asia. Read about how investors can drive Asia’s companies to remove deforestation from their supply chains in this brief by the Good Growth Partnership.
3 February 2020 | Good Growth Partnership: Owen HauckDownload PDF >
Understanding the EU Sustainable Finance Taxonomy: A Workshop for Japanese Investors
The European Union’s new classification system for environmentally sustainable economic activities, aka the EU Taxonomy, sets out criteria for what constitutes green investing. Japanese asset managers discuss how they can use it to explain their approach to ESG to clients.
23 February 2020 | Chie MitsuiDownload PDF >
2020 ESG Trends to Watch
ESG themes are long-term, but some can emerge with sudden force. Five trends are expected to unfold in 2020: climate change innovation, new terms of capital, re-valuing real estate, transforming workforce, and accountability to new stakeholders.
13 January 2020 | MSCI ESG Research LLC: Linda-Eling Lee, Meggin Thwing-Eastman, Ric Marshall
This publication has been assigned 1 Continuing Education (CE) credit under the guidelines of the CFA Institute Continuing Education Program. We encourage CFA Institute members to login to the CE tracking tool to self-document these credits. You can find more CE content in the Continuing Education section of ARX.
SRI Investing and Islamic Finance: Similarities and Differences
Although Islamic finance and sustainable, responsible, and impact (SRI) investing appear unrelated, they share key similarities. Emerging trends may enable financial services providers to develop products that satisfy criteria of both approaches.
3 February 2020 | CFA Institute: Usman Hayat, CFADownload PDF >
Indonesia Green Infrastructure Investment Opportunities
Indonesia plans to expand its green infrastructure to achieve positive environmental and economic benefits. The four key sectors are: renewable energy, low-carbon transport, sustainable water management, and sustainable waste management.
1 February 2020 | Climate Bonds Initiative: Kristiane Davidson, Monica Filkova, Nabilla Gunawan, Amanda GiorgiDownload PDF >
The Role of Korean Institutional Investors in ESG Investing
Environmental, Social and Governance (ESG) investing is increasingly gaining attention in Korea as such investments are expanding internationally. Korean institutional investors are less active in utilizing ESG investing principles than foreign institutional investors. Stronger means are needed to induce Korean institutional investors to move beyond short-term-oriented perspectives and embrace ESG investing.
9 January 2020 | Ick JinDownload PDF >
About the Author(s)
Director: Scott Lee
Content manager, Editor: Piotr Zembrowski, CFA
Coordinator: Natalie Yiu