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The rise of sustainable investments taking into account ESG criteria

In practice, it is beginning to appear that financial data alone are not sufficient to evaluate the viability of a business or an investment in the medium to long term. The introduction of ESG criteria attempts to change the way in which the performance of a company or, by extension, an investment is measured in terms of its sustainability.  The use of ESG introduces specific criteria (environmental, social, corporate governance) against which companies/investments are rated in order to define what is ultimately considered sustainable and to predict the long-term performance of an investment in a more structured way. 

In fact, investors want to know that in the long term their investment will pay off and that their investment is not at risk because of bad environmental policies, lack of social responsibility or poor governance.

By taking ESG factors into account, investors gain a more holistic view of the companies in which they invest, that helps them to mitigate their risk and their exposure, as well as to identify opportunities. 

ESG investments now account for a third of the total global funds under portfolio management

ESG investments now account for a third of total global funds under portfolio management. Estimates for the near future predict a 15% increase, or one third of the growth rate of the last five years. It is estimated that, funds invested with ESG criteria may exceed $41 trillion in 2022 and $50 trillion by 2025. 

So it seems that the ESG issue has moved beyond the "Corporate Social Responsibility" (CSR) of companies. That is, it is not only about social expectation, but it is taking a more substantial form in which criteria and metrics are introduced to determine whether a company is performing well. The challenge for both companies and their evaluators is to ensure the reliability of the data and information provided. In any case, the use of internationally recognised standards and accepted methods of data collection and analysis contribute to this effort. 

E-ON INTEGRATION, has developed innovative IT systems that allow the simultaneous collaboration of individual operating units and executives within a company for the full mapping of ESG indicators and their interconnection with other business functions such as Risk Management and Internal Audit.

Read the whole article in "the Powergame" in greek only


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