It is an encouraging time for those integrating environmental, social and governance factors into the investment process, as 2022 delivered a series of firsts that should help improve that process as well as broader conversations around sustainability.

Many of these were regulatory, such as:the first year of implementation of the Sustainable Finance Disclosure Regulation (SFDR), which aims to improve transparency in the market for sustainable investment products and prevent greenwashing; new proposed regulations in the US to update the “names rule,” the “issuer rule” and the “investor rule”, all to bolster transparency and disclosures for ESG investments; and the Department of Labor permitting retirement plan fiduciaries, such as 401(k) plan sponsors, to consider climate change and other sustainability factors when they select investment options and exercise shareholder rights, such as proxy voting for plan-held securities.

It was also the first year for managers in the Net Zero Asset Managers initiative such as ClearBridge to submit their target-setting methodologies for approval. ClearBridge shared a methodology that offers a forward-looking approach to verifying net-zero alignment that corresponds with their investment goal of identifying companies that will maintain shareholder value and be successful well into the future, as well as with theirfiduciary duty.

Learn more here