ESG Practices: The Way Forward?

Understanding ESG in Contemporary times

Who Cares Wins was published in 2005 with the objective of integrating good environmental, social and governance ("ESG") practices into mainstream financial investing.¹ Fifteen years later, investors and executives champion ESG programs. As of late 2019, sustainable investment has crossed $30 trillion, witnessing a tenfold rise since 2004.²

More companies have become sensitive to ESG in an attempt to have favourable rankings, gain a competitive advantage, reduce operational costs, minimize regulatory interventions, and thereby boost top-line growth.³ Further, having sound ESG policies can help predict and mitigate non-financial risks. ESG has also become a crucial part of M&A transactions.⁴ In the pre-transaction phase, the process of selection of targets and partners now involves scrutiny of these factors including a thorough due diligence on ESG policies.⁵ The implementation of these policies is reflective of company