T. Rowe Price reported today that environmental, social, and governance (ESG) disclosure issues became the number one topic in its engagements with the managements of companies around the world in 2019.
The company said that the rising risks associated with climate change will impact virtually its entire universe of portfolio holdings to varying degrees. Because of this, climate change alongside other ESG factors is being increasingly factored into analysts' evaluation of company fundamentals.
ESG is being ingrained into the investment processes of many firms. For one example, in March, Barclays Research announced the launch of “ESG Fundamental Research,” which highlights the environmental, social, and governance impact of companies under coverage by Barclays’ analysts — similar to T. Rowe Price’s initiative.
Also in March, institutional investors unanimously confirmed that ESG risks and opportunities played an increasingly important role in their investment decisions and their evaluation of portfolio companies during the past 12 months. That was according to Morrow Sodali’s annual Institutional Investor survey, which highlighted several interesting findings, including:
It's clear from recent news that ESG will continue to play an important role in which factors organizations prioritize when contemplating investing moves.