ESG is often used interchangeably with the term “sustainable investing.” We look at sustainable investing as the umbrella, and ESG as a source of data for identifying and informing investment solutions.
ESG data is most often categorized as “non-accounting” information because it captures components important for valuations that are not traditionally reported on. Over time, the valuation of companies has become more complex, with a growing portion tied up in intangible assets. ESG metrics can provide insights into such intangibles including brand value and reputation, by measuring decisions taken by company management that affect operational efficiency and future strategic directions.