The investment industry is stressing the importance of environmental, social and governance considerations in US financial markets ahead of an expected Republican backlash if they take control of the House of Representatives.
Companies and funds with an acute interest in ESG insist that issues such as climate change and human capital management are financially material, albeit non-traditional issues. According to some, the fight against ESG might even add to the growing body of evidence that such factors are crucial for investors.
“The fact that we’re seeing increasing regulation and policy disagreement around ESG is a sign of progress for us,” said Jose Minaya, CEO of investment management firm Nuveen, and Amy O’Brien, Nuveen’s global head of responsible investing.
“Markets grow when the need for greater consistency and clarity becomes apparent, and in 2022 we saw new technologies and innovative business approaches emerge to address new realities as well as systemic social and environmental issues such as financial inclusion and climate change,” they said in a report on Nuveens Investment Stewardship, released last month.
ESG breakthroughs over the past year have included a wave of shareholder proposals designed to pressure companies to do better on climate, diversity and related issues. Meanwhile, the Securities and Exchange Commission has unveiled a series of guidance and proposed rules to improve disclosure and bring greater clarity to ESG investing, including the agency’s controversial climate risk disclosure proposal.
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