Key ESG Policy Trends Changing the Business Landscape in 2022

ESG (environmental, social and governance) investing has grown to become one of the most crucial aspects for organisations. With the rapid growth of smartphone use globally over the last few years, social issues have become more visible than before, and easy access to information has made the public more aware. Ongoing ESG research has led to an immense amount of data in the field, and filtering out the best investment strategies has become challenging. Below, we look at key ESG policy trends that will impact the business landscape in 2022.

Improvement in ESG reporting

As ESG emphasis continues to grow across industries, companies have started focusing more on ESG compliance. Companies that show integrated and authentic ESG efforts would be the best investments. Therefore, both seasoned and first-time ESG investors must look at organisations’ efforts to implement ESG values and provide transparent data and reports to back them up. Several investment firms conduct ESG research, assess companies’ ESG risk and performance and make information available on websites. 

Increased transparency for ESG strategy

Investors are most interested in companies that have core beliefs and values similar to their own. Opportunities for ESG investments are most likely to arise in areas that investors know well. A quick browse through companies’ websites can help identify those with the most potential.

Diversification in ESG industries

As ESG compliance is fast becoming a top priority for companies in almost all industries, ESG portfolios have high potential for diversification. The key for investors is to identify the most prevalent issues for companies and consumers in an industry. Conducting ESG research equips an investor better to make direct investments and informed decisions.

Increasing importance of “S”

Attention to social concerns has been growing over the past few years. The COVID-19 pandemic has simultaneously exposed issues related to healthcare, law enforcement and economic conditions globally. It has directed critical emphasis towards social issues, resulting in greater political and corporate focus on providing financial support to causes crucial to customers and businesses. Companies, and investors, that stay updated on the latest news and trends would be better positioned to place ESG investments in the right places. 

Healthcare brought to the forefront

The pandemic has highlighted issues in healthcare access and affordability. As the healthcare industry becomes more diversified and advanced with changing needs, investors would do well to plan their strategies accordingly in the long term. However, healthcare concerns should not end with easing of public safety protocols, particularly given the resurgence of COVID-19 variants. ESG investors must watch out for companies that address such healthcare concerns and use innovation to do so.