This year may be the “tipping point” for ESG, according to Nasdaq President Adena Friedman.
Friedman noted the recent surge of capital into ESG-related strategies, with Morningstar data showing record net inflows of approximately $18 billion into ETFs and mutual funds for 2019. Furthermore, companies are starting to incorporate sustainability into their core business models. These measures include making sustainability integral to portfolio construction and risk management, exiting investments that present a high sustainability-related risk and launching new investment products that screen fossil fuels.
“If a fundamental realignment of institutional capital takes hold, the magnitude of funds that could be shifted as a result could move the needle in the global effort to combat climate change much faster than many are now expecting,” said Freidman. “2020 could be a monumental year for both profits and purpose.”