ESG History & UN Initiatives PDF

“ III. Brief history of ESG Three UN Initiatives in this century 1  Three UN Initiatives in this century and ESG ▷ Who Cares Wins 2004: first appearance of ESG ▷ PRI 2006: promote ESG investing ▷ UN SDG 2015: specify ESG goals...

“ III. Brief history of ESG Three UN Initiatives in this century 1  Three UN Initiatives in this century and ESG ▷ Who Cares Wins 2004: first appearance of ESG ▷ PRI 2006: promote ESG investing ▷ UN SDG 2015: specify ESG goals 2 Where did “ESG” come from?  Who Cares Wins (WCW): activities initiated by UN Secretary General Kofi Annan  Endorsed by 23 big financial institutions  Deliberations on how to integrate ESG issues in investing  Published a series of report from 2004 to 2008, starting from: 3  ESG and sustainability ▷ Introduction of Who Cares Wins report: ○ Throughout this report we have refrained from using terms such as sustainability, corporate citizenship, etc., in order to avoid misunderstandings deriving from different interpretations of these terms. ○ We have preferred to spell out the environmental, social and governance issues which are the topic of this report. 4 What is G? Narrow definition of G In Who Cares Wins: Now: Broader definition of G is used (S17) 5  UN initiative 2: PRI ▷ The Principles of Responsible Investment (PRI), 2006 ○ Launched 6 Principles for Responsible Investment  encourage investors to incorporate ESG issues into investment practice. ○ By 2021, PRI had ~4,000 financial institutions as “signatories,” from over 50 countries  commit to follow PRI 6  PRI Principles ▷ Keys: do and show 7 UN initiative 3: Sustainable Development Goals (SDG) ▷ In September 2015, all 193 Member States of the UN adopted a plan for achieving a better future for all ▷ Laying out a path over the next 15 years to end extreme poverty, fight inequality and injustice, and protect our planet. ▷ UN Sustainable Development Goals (SDG) 2015 ○ 17 objectives and 169 associated targets to transform the world by 2030. ○ Not legally binding, but useful guidance to decide what are important goals to achieve sustainable development. ○ Some are for governments ○ Some are for businesses ○ Some are for both 9  UN 17 Sustainable Development Goals (SDG) Each goal is for governments? Businesses? both?  an example for a company later 10 Why sustainable finance becomes huge: Demand side Strong investors’ interest in sustainable investing, especially from “millennials” 11 huge: Supply side Business and job opportunities throughout the ecosystem (slide 28) Example: higher fees for ESG funds (Y-chart study 2022) 12 HK’s government’s ambition Requiring more ESG and climate disclosures to 13 catch up with international practices