Report highlights 10 key trends of investor focus likely to impact portfolio risk-return and stakeholder engagement priorities
NEW YORK (January 26, 2023) — ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today released its annual global outlook report, Actionable Insights: Top ESG Themes in 2023. The new report draws on comprehensive ISS ESG data, with research and insights from ISS ESG’s financial research and sector leads, climate specialists, and regulatory experts to help investors identify key ESG risks and opportunities likely to impact their portfolios in 2023. As in previous years, the global outlook report will be complemented next month by locally focused reports for the Americas, EMEA, Asia, and Australia/New Zealand regions. The report series provides a year-long resource and roadmap for global investors seeking to navigate the complexity of diverse global and regional ESG issues and their impacts across various investment markets.
Key takeaways from ISS ESG’s 2023 Global Outlook Report include:
- As many investors continue to move towards Net Zero, obtaining transparent, reliable, and standardized data on portfolio companies’ emissions, targets, and reduction strategies will be in sharp focus in 2023.
- Heightened awareness of the environmental impact of specific industries, such as food and energy, will influence investment decisions, but investors will need to be creative as well as pragmatic in making these decisions.
- With growth volatility likely to be high in 2023, financial opportunities may be realized through non-conventional stock picking frameworks, such as a combination of EVA and ESG Performance Scores from ISS ESG.
- To keep pace with investors’ demand for disclosures, global sustainability standards are in 2023 expected to broaden in scope. Although regulations to promote reporting requirements are generally welcomed, ISS ESG finds that companies with the greatest transparency are not necessarily the best ESG performers.
- Certain industries’ relationships with regulation also present contrasting situations to investors. For example, while the future performance of web-based businesses may be affected by increased regulatory measures meant to address anti-competitive practices, seeking out regulation to protect consumers may become a required catalyst to restore confidence in the crypto sector.
- Finally, ongoing crises such as the COVID-19 pandemic and Russia’s invasion of Ukraine are likely to remain destabilizing forces that will continue to shape the ESG investing landscape in 2023. The pandemic’s toll on worker health will continue to create challenges for companies, while economic sanctions on Russia are expected to persist, short of a cessation of hostilities and reaching of a settlement.
Bonnie Saynay, Global Head of ESG Investor Research at ISS ESG, said: “Our new report demonstrates how ISS ESG’s proprietary data and research team, with significant capital markets experience and sectoral expertise, helps support investors in evaluating and prioritizing evolving ESG risks and investment opportunities, which this year come against a backdrop of high inflation, higher interest rates, lower economic growth, and persistent geopolitical risks.”
To download a copy of the full report, please click here.
About ISS ESG
ISS ESG solutions enable investors to develop and integrate responsible investing policies and practices, engage on responsible investment issues, and monitor portfolio company practices through screening solutions. It also provides climate data, analytics, and advisory services to help financial market participants understand, measure, and act on climate-related risks across all asset classes. In addition, ESG solutions cover corporate and country ESG research and ratings enabling ISS ESG clients to identify material social and environmental risks and opportunities. For more information, please visit us at: www.iss-esg.com
Executive Director, Communications, ISS