Slaying ESG dragons - DWS

For those who are sceptical of ESG, the charges of inconsistency, hypocrisy and unintended consequences have not been put to rest. How should investors respond to such criticisms?

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Responsible investing is one of the hottest issues in finance and business. Global assets managed to sustainable principles have risen a quarter in the past two years and more than 1,7001 investment firms, asset owners, and service providers are signatories to the principles for responsible investment, an initiative supported by the United Nations. From a fringe topic a decade ago, the mainstream beckons.

But sceptics remain. Often this is due to a lack of exposure or understanding. Others are put off for legitimate and sophisticated reasons. Addressing their arguments is crucial if responsible investing is to endure. Any movement that does not embrace criticism loses credibility. More important, there is money on the table. More than $60tn1 in assets is moving to incorporate environment, society, and governance factors. That means roughly half of all the managed money in the world is still to be convinced.

This report summarises the three main criticisms of ESG and suggests the best responses to each of these “dragons”.

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