What institutional investors should do next on ESG
Six ideas for the next level
ESG investing is caught in a cultural trap, according to Jonathan Bailey, Bryce Klempner and Josh Zoffer from McKinsey & Company: "Changing this mind-set requires concrete action." For long-term investors this issue is even more important. "All investors ought to consider material ESG factors. But the long time horizons and broad market exposure of institutional investors mean that they are particularly vulnerable to the good or bad ESG decisions of the companies in which they invest. Some institutions have developed innovative investment strategies to deal with this issue."
Jonathan Bailey (Jonathan_Bailey@McKinsey.com), formerly of Generation Investment Management, is an associate principal in McKinsey‘s New York office, where Bryce Klempner (Bryce_Klempner@McKinsey.com) is a principal and Josh Zoffer (Josh_Zoffer@McKinsey.com) is a consultant.
The authors wish to thank David Munroe, Davide Pisanu, and Todd Wintner for their contributions to this article.