The Cost Of Ignoring ESG

The Cost Of Ignoring ESG

Environmental accountability has exploded in recent years. Climate change has been a dominant driver of this growth. There is broad agreement among nations that rising global carbon dioxide emissions must be addressed. This growing awareness has resulted in tremendous pressure on the energy sector to adapt to a new reality. Clean energy, decarbonization, and distributed power have become drivers of investment in the energy industry. According to the US SIF Foundation's 2020 Report on US Sustainable and Impact Investing Trends, as of year-end 2019, one out of every three dollars under professional management in the United States—$17. 1 trillion—was managed in accordance with sustainability metrics. In response to this growing trend, most companies have developed policies on Environmental, Social, and Corporate Governance (ESG). Businesses that fail to consider such metrics can experience a significant financial impact. MSCI Inc. MSCI , a global provider of financial and portfolio analysis tools, conducted a four-year study on this issue. The study found that companies with high ESG scores experienced lower costs of capital, lower equity costs, and lower debt costs compared to companies with poor ESG scores. Experts at McKinsey sound an even more clarion tone. They cite more than 2, 000 academic