Talking To Investors About Pricing In Corporate Governance Risks

by Dina Medland for Forbes

Anyone in denial about the growing importance of corporate governance, environmental and social factors in setting the direction of business needs to start talking to investors.Some 90% of institutional investors from across the UK and Europe believe fund managers should price in corporate governance risks as a core part of their investment analysis, alongside financial metrics.

Environmental, social and corporate governance factors (ESG) are becoming increasingly significant for institutional investors, with over two-thirds believing that pension schemes will reject a growing number of investment opportunities over the next five years if they involved ESG risks, according to Hermes InvestmentManagement’s first ‘Responsible Capitalism’ survey. It finds that 79% of respondents consider significant ESG risks with financial implications as sufficient reasons to reject an otherwise attractive investment. As many as 71% believe that company pension schemes will reject more investment opportunities over the next five years due to ESG risk. Read more here.

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