ESG and Green Investor Macro Trends

Question 1

What is the current global dollar value of professionally-managed assets integrating ESG factors?

Answer 1

According to Goldman Sachs, more than $23 Trillion of professionally-managed assets now integrate ESG factors into their investment decision-making process.

Question 2

What are three key reasons that professional investors cite for choosing to incorporate ESG factors into investment decisions?

Answer 2

1) Integrating ESG factors may lower long-term risk exposures,
2) Integrating ESG factors may improve returns, and
3) Integrating ESG factors may help generate alpha.

Question 3

What are two key reasons cited by asset managers for integrating ESG into their fixed income investment decision making process?

Answer 3

Asset managers integrate ESG factors into their fixed income investment process to (1) better manage risk which can impact long-term credit performance and (2) to facilitate the allocation of debt capital to sustainable investments.

Question 4

Identify two key reasons why asset managers are integrating ESG into their public and private equity investment decision making process?

Answer 4

1) Integrating ESG factors may address “low probability, but high-impact factors” which affect long-term financial returns, and
2) Integrating ESG factors addresses their fiduciary responsibility to consider these risk factors as part of their long-term investment strategy.

Question 5

What approach does Goldman Sachs recommend for improved Green project finance success?

Answer 5

Goldman Sachs recommends taking a “systems approach” across a series of smaller, interconnected projects to drive better focused and more efficient development of projects.