14-06-2021 17:56

ESG: Reaping the rewards

In recent years, ESG has rapidly gone from being seen as a niche investment philosophy to a business necessity. In the latest Nordea On Your Mind, "ESG: Reaping the rewards", Nordea Thematics delves into the role of ESG ratings and their relationship to companies' financial performance.

From niche to mainstream to necessity

The first ESG-themed Nordea On Your Mind report was published in 2017. At that time, Nordea Thematics thought momentum was strong, but the trend has exploded since then.

Powerful ESG drivers include evidence of climate change, regulatory changes such as the EU Action Plan for financing sustainable growth, growing consumer demand for sustainable consumption and investment policies for saving, along with evidence of the significant costs associated with ESG failures and incidents.

Starting out as a niche investment philosophy, ESG is increasingly seen as a necessity for having a long-term, viable business and qualifying for funding. As an illustration of ESG’s popularity, Nordea Thematics notes that global issuance of sustainable bonds has grown almost fivefold since 2016, up to nearly USD 500bn in 2020.

How to show you are sustainable: ESG ratings

An ESG rating can be a useful yardstick for the outside world to gauge a company’s ESG performance. It is a rapidly evolving field, increasingly dominated by a handful of global rating providers.

Visit Open Insights if you want more insights from the report and our ESG experts.

Did you know

That global issuance of sustainable bonds has grown almost fivefold since 2016, up to nearly USD 500bn in 2020?

Nordea On Your Mind on podcast

Listen also to the Nordea On Your Mind podcast where Johan Trocmé, Viktor Sonebäck and Kajsa Andersson discuss what has driven the hype for sustainability, why it is here to stay, and how their analysis clearly shows that it pays off through superior financial performance.

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Nordea On Your Mind