When investors evaluate a company’s long-term success, finances are always a top consideration. However, environmental, social, and governance (ESG) efforts are also increasingly being taken into account. According to a report from the Forum for Sustainable and Responsible Investment, $8.7 trillion, or one out of every five dollars under professional management in the U.S., was invested according to socially responsible investing strategies in 2016.
Across all industries, many investors look to understand companies’ relative performance in the relevant ESG areas to understand how opportunity and risk are managed, and to determine how ESG components help companies drive critical success factors like growth, innovation, and talent retention.
Recently, Crystal Barnes, SVP, Global Responsibility & Sustainability, sat down with Sara Gubins, SVP, Investor Relations, to discuss the growing importance of ESG considerations when it comes to investors’ understanding of long-term business success.
In their conversation, Sara shared some of the key ESG areas that matter to investors, such as talent development and retention; diversity and inclusion; governance and management incentives; technology and cybersecurity; and climate change. However, she cautioned that investors place varying degrees of importance or relevance on these areas depending on the industry.
“ESG can mean a broad range of things for investors. They are focused not only on the financial bottom line but on how companies get there. We can think about that as an ESG bottom line and a financial bottom line. There’s increasing recognition that those two are intertwined,” said Sara. “[For Nielsen], our Path to 2020 is a financial path to 2020, but when we think about how we get there, there are also ESG initiatives like reducing our carbon footprint and digitizing our processes.”
Visit our 2016-2017 non-financial materiality assessment and Nielsen Global Responsibility Report for more information about the ESG areas that are most important to our stakeholders and our long-term business success.