ESG: ESG Investing at Inflection Point in 2020, says Nasdaq Head

January 23, 2020 | ESG and Sustainability
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The theme for Davos this year: “Stakeholders for a Cohesive and Sustainable World.”

It’s the 50th annual World Economic Forum at Davos. Nasdaq President and CEO Adena Friedman wrote in LinkedIn on Monday:  “As we look ahead to a new year and a new decade, it’s far from clear that our world can be described right now as either cohesive or sustainable.”

However, Friedman is enthused by the progress on ESG during 2019 and the prospects for it in 2020.

2019: an encouraging year for ESG

Friedman drew attention to the encouraging trends for ESG in 2019.

These included the inexorable rise of ESG decision-making in many industries to the boardroom level. Further, there were record inflows into sustainable strategies in 2019. According to Morningstar data, approximately $ 18 billion surged into ESG focused ETF’s and mutual funds in 2019, Friedman noted.

She was particularly appreciative of the fact that “BlackRock is committing to making sustainability of core part of their investment strategy for the first time.”

“This is encouraging and a wake-up call to boards and CEOs everywhere,” she wrote.

BlackRock’s Larry Fink on ESG

Climate risk is investment risk, Fink had warned in his annual letter to investee CEOs titled “A Fundamental Reshaping Of Finance.”

“Because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself,” Fink wrote. “In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”

He warned companies: “We will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them.”

2020: an inflection point for ESG

Therefore, “2020 is increasingly looking like it may be the tipping point year for ESG investing,” said Friedman.

Friedman also commented that if institutions decided to reallocate their capital in favor of ESG, the sheer magnitude of the funds could accelerate the drive to combat climate change globally.

Related Story:  BlackRock Joins Climate Action 100+

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