A current area of focus for investors with a commitment to ESG issues or delivering impact is how to assess the profile of potential targets or their current portfolios.
Harvard Business School has launched a new initiative to assess the monetary environmental impact of thousands of large companies. The project is part of a general trend to allow investors to assess the ESG profile of their investments with a similar rigour as financial matters.
The inclusion of ESG / impact metrics would assist in decision making and the identification of best-in-class companies.
The call for impact-weight accounts may seem novel but it is consistent with a number of changes that are already being made. With effect from 1 January this year, a new revision to the UK Stewardship Code came into force. The revised Code includes a new focus on ESG issues.
A general current trend in regulation is to require more disclosure from companies, in order to allow investors and the market to make an informed assessment. A requirement to include an impact-weighted analysis in the accounts of large companies may not be too far in the future.
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