Universal Owners and ESG: leaving money on the table?

Abstract

ESG (environmental, social and governance) issues represent both a “tragedy of the commons” and a golden opportunity for a positive system change. Universal Owners should recognise both their power and their responsibilities, and then to leverage their investment strategies to catalyse ESG improvements in their investee companies. This can be done through both stock selection and direct engagement with companies. To date, unfortunately, a myriad of largely cognitive barriers have prevented Universal Owners from mobilising their considerable investment power in this way to any significant extent. There is, however, some encouraging evidence that this is beginning to change.