ANALYSIS: From Acronym to Concept, Investors Connect ESG Pillars

Investors have begun to shift away from approaching the term “ESG” as distinct environmental, social, and governance issues affecting a company’s financial performance. Instead, investors are increasingly conscious of whether the companies they’re investing in embody their overall values—and those values can often cut across ESG pillars.

Companies that have implemented environmental policies to address climate change, for example, may have once satisfied the value appraisals of investors seeking to make climate-conscious investments. But now investors are looking for companies to address the human displacement resulting from extreme weather as part of that same risk equation.

This development is likely ...