Environmental social governance—the investment market
Produced in partnership with Tim Clare of Anthesis
Environmental social governance—the investment market

The following Environment guidance note Produced in partnership with Tim Clare of Anthesis provides comprehensive and up to date legal information covering:

  • Environmental social governance—the investment market
  • Brexit impact
  • What is environmental social governance (ESG)?
  • Scope: what is included within ESG?
  • Why is ESG growing in importance?
  • Legislative drivers
  • Key ESG associations/bodies, standards and reporting frameworks
  • Benchmarks ESG disclosures, regulation on disclosures relating to sustainable investments and sustainability and the Taxonomy Regulation
  • Commission seeks feedback on sustainable finance delegated acts
  • European Green Deal
  • more

Brexit impact

As of exit day (31 January 2020), the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this content. For further guidance, see: Brexit—impact on environmental law and Brexit Bulletin—key updates, research tips and resources.

What is environmental social governance (ESG)?

Environmental social governance (ESG) is an umbrella term covering a range of environmental, social and governance factors against which the performance of a, usually corporate entity, can be evaluated. The term is closely aligned with the concept of ‘responsible investment’ and is predominantly used in the financial services sector, albeit this is slowly broadening to the wider corporate world as its implementation has increased, following the flow of investment capital.

ESG has grown in importance as financial institutions, responding to pressure from their own investors, and wider physical, market and societal drivers, have sought to evaluate their own performance and those of the funds and companies they invest in, increasingly setting performance standards and improvement targets as a condition of that investment.

This Practice Note considers ESG in the broader sense and then focuses in detail on the response of pension funds and related institutional investors (routinely referred to