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Environment, Social and Governance (ESG) issues

Institutional and other kinds of investors, from financial institutions to governments, are increasingly aware of the significant role they play in terms of addressing climate change risks, diversity on boards, modern slavery, and executive pay. While once it may have been regarded as legitimate to leave social, environmental, diversity and non-financial issues to the state, now it is clear that everyone is expected to do far more.

Corporations, as one of the main engines in the production and diffusion of value, now need to put the environment and society at front and centre of their investment decisions, rather than at the periphery. Indeed, today the environmental and social impact of a portfolio, underpinned by good corporate governance, is a vital consideration for institutional investors and pension fund trustees. However whether these calls for greater attention to ESG and impact investment are simply window dressing or a serious concern that informs investments decisions - both in the private and public sector - remains to be seen.

At CAIR we conduct research to explore the ambiguity of what is meant by 'impact', 'good', and even 'governance', as the meaning of these terms is no longer as obvious as it was when maximising shareholder value underpinned the rationale for financial decisions.