Contenido

La amenaza del cambio climático ha aumentado, por lo que los inversores pueden optar por tener en cuenta los problemas de sostenibilidad en sus opciones de inversión. Los problemas a menudo representan externalidades, como influencias en el funcionamiento y los ingresos de la empresa, que no se ven afectados exclusivamente por los mecanismos del mercado.[16]​ Al igual que con todas las áreas de ESG, la variedad de posibles preocupaciones es amplia (por ejemplo, emisiones de gases de efecto invernadero, biodiversidad, gestión de residuos, gestión del agua emisiones de gases de efecto invernadero, biodiversidad, gestión de residuos, gestión del agua), pero algunas de las áreas principales se enumeran a continuación:.

Climate crisis

The body of research providing evidence of global trends in climate change has led investors (pension funds, insurance reserve funds) to begin evaluating investments in terms of their impact on perceived drivers of climate change. In the United Kingdom, investment policies were particularly affected by the findings of the 2006 Stern Report, a report commissioned by the British government to provide an economic analysis of the problems associated with climate change. Their findings pointed to the need to include considerations of climate change and environmental issues in all financial calculations.[17]​.

Environmental sustainability and agroecology

In all areas of debate, from resource depletion to the future of industries that depend on dwindling raw materials. The issue of obsolescence of a company's product or service is becoming central to the value attributed to that company. The long-term vision is becoming predominant among investors.[18] Likewise, organic farming and agroecology are taken into account in agriculture and livestock.

animal welfare

Animal welfare concerns involve testing products or ingredients on animals, breeding for testing, exhibiting animals, or factory farming.[19]​.

Diversity

There is a growing, but still unproven, belief that the broader the talent pool available to an employer, the greater the chances of finding the best person for the job.[20]​ Innovation and agility are seen as the great benefits of diversity, and there is a growing awareness of what is known as 'the power of difference'.[21]​.

Human rights

In 2006, the U.S. Courts of Appeals ruled that there was a case to be made by bringing the area of ​​a company's social responsibilities directly into the financial realm.[22] This area of ​​concern is expanding to include considerations such as the impact on local communities, the health and well-being of employees, and a more complete examination of a company's supply chain.

Consumer protection

Until relatively recently, caveat emptor ("buyer beware") was the guiding principle of commerce and transactions. In recent times, however, there has been a greater assumption that the consumer is entitled to a degree of protection and the huge growth in tort litigation has meant that consumer protection is a central consideration for those seeking to limit a business's risk. The collapse of the US subprime mortgage market started a growing movement against predatory lending and has also become a major area of ​​concern.[23]​.

Management structure

The system of internal procedures and controls that makes up the management structure of a company is in the valuation of that company's assets.[24] Attention has focused in recent years on the balance of power between the CEO and the board of directors, specifically, on the differences between the European model and the American model: in American studies it has been found that 80% of companies have a CEO who is also the chairman of the board, in the UK and European model it was found that 90% of companies Larger companies split the roles of CEO and president.[25]​.

Labor relations

In the United States, the list of the 100 best companies to work for by Fortune Moskowitz "Fortune (magazine)"), has become not only an important tool for employees, but companies are beginning to compete intensely for a place on the list, since it not only helps recruit the best workforce, it appears to have a notable impact on the company's values.[26]​ Labor relations are also related to the representation of co-workers in company decision-making and the ability to participate in a union.

Executive Compensation

Companies are now being asked to list the percentage levels of bonus payments and compensation for the highest-paid executives, as they are being closely scrutinized by shareholders and equity investors alike.

Employee Compensation

In addition to executive compensation, equitable pay of other employees is a consideration in the governance of an organization. This includes pay equity for employees of all genders. Pay equity audits and the results of those audits may be required by various regulations, in some cases, to be available to the public for review. Hermann J. Stern differentiates four methods for including ESG performance in employee compensation:[27]​.

A company's financial performance represents its overall financial health, that is, it is used to verify the company's viability and its growth potential.[29] A 2024 study by Susen and Etter demonstrates that higher levels of ESG performance (called ESG Tilt) and changes in ESG performance over time (ESG Momentum) are positively correlated with an increase in employee satisfaction in S&P 500 companies, mediated by perceptions of organizational justice and expectations of future rewards.[30]​ These intangible factors are considered the missing links between observed ESG performance and a company's financial results.[31]​.

Other studies have shown that integrating ESG criteria into products has an effect on company performance. According to a 2015 study by Friede, Busch and Bassen, there is a positive link, demonstrated in 90% of cases, between ESG performance and financial performance. This positive link can be explained by a reduction in risk exposure. Integrating ESG criteria mitigates potential ESG-related risks. For example, complying with environmental regulations avoids certain sanctions that could affect the financial aspect.[32] Another study points in the same direction, stating that the publication of sustainability reports improves financial performance,[33]​ and reputation, and leads to the creation of a significant competitive advantage for the company.[34]​ Furthermore, this disclosure is positively associated with return on equity.

Companies that adopt ESG criteria tend to generate higher profits, as investors are more oriented towards greener and more sustainable products. These investors now take these guidelines more into account in their investment decisions. In other words, the objective of integrating an ESG policy is to have a positive effect on financial performance to cover the costs it generates.

Despite the positive correlation between the inclusion of ESG criteria and financial performance, this does not imply that the main objective of companies is to become socially and environmentally responsible. According to Milton Friedman (1962), "the primary objective of a company is to increase the wealth of its shareholders." Furthermore, the rise of ESG is a good opportunity for many corporate investors to make money. There are still no universal criteria to evaluate whether a fund is ESG or not. Investors rely on ratings to make their investments, but these ratings do not always reflect a complete picture of ESG performance as they are based on incomplete data provided by the company itself. Good ESG performance attracts and retains investors. Finally, although many studies show a positive relationship between good ESG performance and financial performance, other studies show that it is difficult to quantify the real financial effect of an improvement in a company's social performance.[32]​.

Assigning a precise monetary value to ESG issues is complex, if not arduous. Established quantitative models and ESG ratings do not always adequately capture these values, making them difficult to integrate into investment decisions based on short-term financial data.[35]​.

Initially, studies focused on the effect of CSR on financial performance, using models such as the CAPM. Previous research, such as that of Alexander and Buchholz in 1978, found no significant link between socially responsible actions and stock market returns. Later studies, such as those by Cochran and Wood in 1984, Aupperle, Carroll and Hatfield in 1985, and Blackburn, Doran and Shrader in 1994, confirmed this lack of correlation between ESG and the financial performance of companies, despite different methodological approaches.

Even when studies have attempted to specifically measure performance in relation to CSR, such as that of Aupperle, Carroll and Hatfield in 1985, using risk-adjusted profitability measures, they have reached similar conclusions: the absence of a significant relationship between CSR and corporate profitability.

Various studies have questioned the idea that greater investment in ESG criteria always contributes to corporate value. Some researchers suggest that excessive investment or excessive control in ESG initiatives can not only be ineffective, but also generate counterproductive effects on the company's valuation.[36]​ In certain cases, overinvestment in ESG by companies or excessive control by investors can limit the expected benefits.[37]​.

In this context, research suggests that the relationship between ESG performance and corporate valuation may be non-linear and exhibit polynomial characteristics, such as inverted U-shaped patterns.[38]​ This suggests the existence of an optimal level of ESG investing where the benefits to corporate valuation are maximized, beyond which diminishing returns or even adverse effects could arise.[39]​.

Los tres dominios social, ambiental y de gobierno corporativo están íntimamente ligados al concepto de inversión responsable. Las inversiones responsables comenzaron como una área de inversión de nicho, atendiendo las necesidades de aquellos que deseaban invertir, pero querían hacerlo dentro de parámetros éticamente definidos.

Principles for responsible investment

The Responsible Investment Principles Initiative was established in 2005 by the United Nations Environment Program Finance Initiative and the United Nations Global Compact as a framework to improve the analysis of ESG issues in the investment process and to assist companies in exercising responsible ownership.

Equator Principles

The Equator Principles are a risk management framework, adopted by financial institutions, to determine, evaluate and manage environmental and social risk in project financing. Its primary objective is to provide a minimum standard of due diligence to support responsible risk decision-making.[40]​ As of October 2019, 97 financial institutions in 37 countries had officially adopted the Equator Principles.[41]​ Equator Principles Financial Institutions (EPFIs) commit not to lend to projects where the borrower does not or cannot comply with their respective social and environmental policies and procedures.

The Equator Principles, formally launched in Washington D.C. on June 4, 2003, were based on existing environmental and social policy frameworks established by the International Finance Corporation. These standards were subsequently updated periodically in what is commonly known as the International Finance Corporation Performance Standards on social and environmental sustainability and in the World Bank Group Environmental, Health and Safety Guidelines.[42]​.

The environmental, social and governance (ESG) information of listed companies has always been valued by the global capital market, and more mature ESG rating and investment systems have been developed.[43]​ The ESG rating is the result of a company's ESG analysis. It is based on:

The sustainability rating is generally entrusted to research centers specialized in the collection and processing of information and data on the ESG behavior of companies.[44]​.

In the first ten years of the century, the investment market defined by the ESG grew.[45]​ Not only do most of the world's large banks have departments and divisions dedicated exclusively to responsible investment, but boutique companies specializing in advising on environmental, social and management investments are also multiplying. One of the main aspects of the ESG aspect of the insurance market that causes this proliferation trend is the essentially subjective nature of the information on the basis of which investment decisions can be made. The lack of clear standards and transparent monitoring has raised concerns that ESG recognitions primarily serve companies' green and public relations goals, diverting attention from more substantial initiatives to improve the environment and society.[46][47][48]​.

In March 2021, the SEC announced that regulatory compliance reviews related to ESG disclosure will be a focus of the agency's attention in 2021.[49]​[50]​ That same month, the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) announced that it would review and waive the Trump administration's final rule for employee proxy voting powers. Employee Retirement Income Security Act of 1974 (ERISA), which only takes into account pecuniary interests and not ESG factors in investments for 401(k)s under E.O. 13990.

In November 2021, the SEC rescinded a Trump administration rule issued in 2017 that allowed CEOs to exclude ESG shareholder proposals from annual proxy statements.[51]​.

Contenido

La amenaza del cambio climático ha aumentado, por lo que los inversores pueden optar por tener en cuenta los problemas de sostenibilidad en sus opciones de inversión. Los problemas a menudo representan externalidades, como influencias en el funcionamiento y los ingresos de la empresa, que no se ven afectados exclusivamente por los mecanismos del mercado.[16]​ Al igual que con todas las áreas de ESG, la variedad de posibles preocupaciones es amplia (por ejemplo, emisiones de gases de efecto invernadero, biodiversidad, gestión de residuos, gestión del agua emisiones de gases de efecto invernadero, biodiversidad, gestión de residuos, gestión del agua), pero algunas de las áreas principales se enumeran a continuación:.

Climate crisis

The body of research providing evidence of global trends in climate change has led investors (pension funds, insurance reserve funds) to begin evaluating investments in terms of their impact on perceived drivers of climate change. In the United Kingdom, investment policies were particularly affected by the findings of the 2006 Stern Report, a report commissioned by the British government to provide an economic analysis of the problems associated with climate change. Their findings pointed to the need to include considerations of climate change and environmental issues in all financial calculations.[17]​.

Environmental sustainability and agroecology

In all areas of debate, from resource depletion to the future of industries that depend on dwindling raw materials. The issue of obsolescence of a company's product or service is becoming central to the value attributed to that company. The long-term vision is becoming predominant among investors.[18] Likewise, organic farming and agroecology are taken into account in agriculture and livestock.

animal welfare

Animal welfare concerns involve testing products or ingredients on animals, breeding for testing, exhibiting animals, or factory farming.[19]​.

Diversity

There is a growing, but still unproven, belief that the broader the talent pool available to an employer, the greater the chances of finding the best person for the job.[20]​ Innovation and agility are seen as the great benefits of diversity, and there is a growing awareness of what is known as 'the power of difference'.[21]​.

Human rights

In 2006, the U.S. Courts of Appeals ruled that there was a case to be made by bringing the area of ​​a company's social responsibilities directly into the financial realm.[22] This area of ​​concern is expanding to include considerations such as the impact on local communities, the health and well-being of employees, and a more complete examination of a company's supply chain.

Consumer protection

Until relatively recently, caveat emptor ("buyer beware") was the guiding principle of commerce and transactions. In recent times, however, there has been a greater assumption that the consumer is entitled to a degree of protection and the huge growth in tort litigation has meant that consumer protection is a central consideration for those seeking to limit a business's risk. The collapse of the US subprime mortgage market started a growing movement against predatory lending and has also become a major area of ​​concern.[23]​.

Management structure

The system of internal procedures and controls that makes up the management structure of a company is in the valuation of that company's assets.[24] Attention has focused in recent years on the balance of power between the CEO and the board of directors, specifically, on the differences between the European model and the American model: in American studies it has been found that 80% of companies have a CEO who is also the chairman of the board, in the UK and European model it was found that 90% of companies Larger companies split the roles of CEO and president.[25]​.

Labor relations

In the United States, the list of the 100 best companies to work for by Fortune Moskowitz "Fortune (magazine)"), has become not only an important tool for employees, but companies are beginning to compete intensely for a place on the list, since it not only helps recruit the best workforce, it appears to have a notable impact on the company's values.[26]​ Labor relations are also related to the representation of co-workers in company decision-making and the ability to participate in a union.

Executive Compensation

Companies are now being asked to list the percentage levels of bonus payments and compensation for the highest-paid executives, as they are being closely scrutinized by shareholders and equity investors alike.

Employee Compensation

In addition to executive compensation, equitable pay of other employees is a consideration in the governance of an organization. This includes pay equity for employees of all genders. Pay equity audits and the results of those audits may be required by various regulations, in some cases, to be available to the public for review. Hermann J. Stern differentiates four methods for including ESG performance in employee compensation:[27]​.

A company's financial performance represents its overall financial health, that is, it is used to verify the company's viability and its growth potential.[29] A 2024 study by Susen and Etter demonstrates that higher levels of ESG performance (called ESG Tilt) and changes in ESG performance over time (ESG Momentum) are positively correlated with an increase in employee satisfaction in S&P 500 companies, mediated by perceptions of organizational justice and expectations of future rewards.[30]​ These intangible factors are considered the missing links between observed ESG performance and a company's financial results.[31]​.

Other studies have shown that integrating ESG criteria into products has an effect on company performance. According to a 2015 study by Friede, Busch and Bassen, there is a positive link, demonstrated in 90% of cases, between ESG performance and financial performance. This positive link can be explained by a reduction in risk exposure. Integrating ESG criteria mitigates potential ESG-related risks. For example, complying with environmental regulations avoids certain sanctions that could affect the financial aspect.[32] Another study points in the same direction, stating that the publication of sustainability reports improves financial performance,[33]​ and reputation, and leads to the creation of a significant competitive advantage for the company.[34]​ Furthermore, this disclosure is positively associated with return on equity.

Companies that adopt ESG criteria tend to generate higher profits, as investors are more oriented towards greener and more sustainable products. These investors now take these guidelines more into account in their investment decisions. In other words, the objective of integrating an ESG policy is to have a positive effect on financial performance to cover the costs it generates.

Despite the positive correlation between the inclusion of ESG criteria and financial performance, this does not imply that the main objective of companies is to become socially and environmentally responsible. According to Milton Friedman (1962), "the primary objective of a company is to increase the wealth of its shareholders." Furthermore, the rise of ESG is a good opportunity for many corporate investors to make money. There are still no universal criteria to evaluate whether a fund is ESG or not. Investors rely on ratings to make their investments, but these ratings do not always reflect a complete picture of ESG performance as they are based on incomplete data provided by the company itself. Good ESG performance attracts and retains investors. Finally, although many studies show a positive relationship between good ESG performance and financial performance, other studies show that it is difficult to quantify the real financial effect of an improvement in a company's social performance.[32]​.

Assigning a precise monetary value to ESG issues is complex, if not arduous. Established quantitative models and ESG ratings do not always adequately capture these values, making them difficult to integrate into investment decisions based on short-term financial data.[35]​.

Initially, studies focused on the effect of CSR on financial performance, using models such as the CAPM. Previous research, such as that of Alexander and Buchholz in 1978, found no significant link between socially responsible actions and stock market returns. Later studies, such as those by Cochran and Wood in 1984, Aupperle, Carroll and Hatfield in 1985, and Blackburn, Doran and Shrader in 1994, confirmed this lack of correlation between ESG and the financial performance of companies, despite different methodological approaches.

Even when studies have attempted to specifically measure performance in relation to CSR, such as that of Aupperle, Carroll and Hatfield in 1985, using risk-adjusted profitability measures, they have reached similar conclusions: the absence of a significant relationship between CSR and corporate profitability.

Various studies have questioned the idea that greater investment in ESG criteria always contributes to corporate value. Some researchers suggest that excessive investment or excessive control in ESG initiatives can not only be ineffective, but also generate counterproductive effects on the company's valuation.[36]​ In certain cases, overinvestment in ESG by companies or excessive control by investors can limit the expected benefits.[37]​.

In this context, research suggests that the relationship between ESG performance and corporate valuation may be non-linear and exhibit polynomial characteristics, such as inverted U-shaped patterns.[38]​ This suggests the existence of an optimal level of ESG investing where the benefits to corporate valuation are maximized, beyond which diminishing returns or even adverse effects could arise.[39]​.

Los tres dominios social, ambiental y de gobierno corporativo están íntimamente ligados al concepto de inversión responsable. Las inversiones responsables comenzaron como una área de inversión de nicho, atendiendo las necesidades de aquellos que deseaban invertir, pero querían hacerlo dentro de parámetros éticamente definidos.

Principles for responsible investment

The Responsible Investment Principles Initiative was established in 2005 by the United Nations Environment Program Finance Initiative and the United Nations Global Compact as a framework to improve the analysis of ESG issues in the investment process and to assist companies in exercising responsible ownership.

Equator Principles

The Equator Principles are a risk management framework, adopted by financial institutions, to determine, evaluate and manage environmental and social risk in project financing. Its primary objective is to provide a minimum standard of due diligence to support responsible risk decision-making.[40]​ As of October 2019, 97 financial institutions in 37 countries had officially adopted the Equator Principles.[41]​ Equator Principles Financial Institutions (EPFIs) commit not to lend to projects where the borrower does not or cannot comply with their respective social and environmental policies and procedures.

The Equator Principles, formally launched in Washington D.C. on June 4, 2003, were based on existing environmental and social policy frameworks established by the International Finance Corporation. These standards were subsequently updated periodically in what is commonly known as the International Finance Corporation Performance Standards on social and environmental sustainability and in the World Bank Group Environmental, Health and Safety Guidelines.[42]​.

The environmental, social and governance (ESG) information of listed companies has always been valued by the global capital market, and more mature ESG rating and investment systems have been developed.[43]​ The ESG rating is the result of a company's ESG analysis. It is based on:

The sustainability rating is generally entrusted to research centers specialized in the collection and processing of information and data on the ESG behavior of companies.[44]​.

In the first ten years of the century, the investment market defined by the ESG grew.[45]​ Not only do most of the world's large banks have departments and divisions dedicated exclusively to responsible investment, but boutique companies specializing in advising on environmental, social and management investments are also multiplying. One of the main aspects of the ESG aspect of the insurance market that causes this proliferation trend is the essentially subjective nature of the information on the basis of which investment decisions can be made. The lack of clear standards and transparent monitoring has raised concerns that ESG recognitions primarily serve companies' green and public relations goals, diverting attention from more substantial initiatives to improve the environment and society.[46][47][48]​.

In March 2021, the SEC announced that regulatory compliance reviews related to ESG disclosure will be a focus of the agency's attention in 2021.[49]​[50]​ That same month, the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) announced that it would review and waive the Trump administration's final rule for employee proxy voting powers. Employee Retirement Income Security Act of 1974 (ERISA), which only takes into account pecuniary interests and not ESG factors in investments for 401(k)s under E.O. 13990.

In November 2021, the SEC rescinded a Trump administration rule issued in 2017 that allowed CEOs to exclude ESG shareholder proposals from annual proxy statements.[51]​.