ESG ratings have emerged as the top factor influencing investment decisions globally in 2023, with varying impacts across regions. In Europe, 27 percent of institutional investors considered ESG ratings as a key driver, followed closely by Canada at 25 percent. In the United States, 17 percent of investors noted influence from this driver, while APAC shows minimal influence at just 2 percent. Sustainable Development Goals and ESG ETF Investments Climate action, represented by Goal 13 of the United Nations Sustainable Development Goals (SDG), has become the primary focus for ESG ETFs globally. As of 2024, assets worth 75.1 billion U.S. dollars were linked to this goal, with 280 out of 552 ESG ETFs targeting climate action. This emphasis on environmental concerns has aligned with the broader overall trend of investors prioritizing companies with strong ESG practices and ratings. Regional Variations in Sustainable Fund Demand While the demand for sustainable funds has remained relatively stable or has been perceived to increase across some regions, differences have been notable. In the United States, 14 percent of investors reported decreased demand for sustainable funds compared to non-sustainable options. However, Canada stands out, with over 95 percent of investors having indicated stable or increasing demand. This regional variation underscores the importance of understanding local market dynamics when developing sustainable investment strategies.

The share of exchanges who reported investor demand for environmental, social, and governance (ESG) disclosure in their jurisdiction have increased gradually from 70 percent in 2018 to 96 percent in 2024.

In 2024, the environmental, social, and governance (ESG) scores of the largest banks worldwide varied markedly across different score providers. JPMorgan Chase, the largest bank globally in terms of market capitalization, showed a wide range of scores: when standardized to a score out of 100, the highest score was given by MSCI, at 64.3, and the lowest by S&P Global (previously RobecoSAM), at 29, while the score from Sustainalytics had a value of 45. With only one green bond issued since December 2020, JPMorgan Chase ranked tenth among the leading banks worldwide by value of green bond issuance. Growing commitment to sustainability Banks worldwide are increasingly recognizing the importance of sustainability in their operations. The Net-Zero Banking Alliance, launched in 2021, has grown to include 144 members as of September 2024, with the majority located in Europe. This initiative demonstrates the banking sector's commitment to aligning their operations with the goal of achieving net-zero emissions by 2050. Members are required to set interim targets and provide annual progress reports, indicating a shift towards more transparent and accountable sustainability practices in the industry. ESG scores and their growing role in investment decisions ESG scores measure a company's exposure to long-term environmental, social, and governance risks. These non-financial factors are a growing concern for investors worldwide, and many of them now integrate ESG data in their investment decision-making to have a positive impact on the environment and society. As a result, the assets of ESG funds worldwide increased considerably in recent years, reaching a value of 480 billion U.S. dollars in 2023. ESG factors cover a broad spectrum of sustainability criteria, but environmental concerns are still the main drivers of ESG investing. Despite rising pressure on companies to decrease their impact on the environment, the carbon dioxide emissions of the largest banks worldwide are still far from sustainable.

From the ETF investors surveyed in the U.S., Europe, and Greater China, 74 percent of respondents planned to increase their investment in of Environmental, Social, and Governance (ESG) ETF investments over the next year. Eleven percent of investors plan to decrease their allocation to ESG ETFs, and a further 14 percent of investors had decided to remain the same in their ESG ETF allocations.

As of 2024, the top three U.S. publicly listed companies ranked by overall climate management varied by industry. Colgate-Palmolive, operating within the consumer industry, received an overall climate management score of 69.7. Southern Co. ranked second with a climate management score of 69.9, operating in the utilities' industry. Moody's financial service provider ranked in the top spot, being the only publicly listed firm to receive a score of 70.

Reporting on Sustainable Development Goals (SDGs) was approximately 25 percentage points higher among G250 firms compared to N100 firms. Among N100 firms, climate risks were the most commonly reported, whereas governance risks were the most frequently reported by G250 firms.

As of 2023, investors were primarily concerned with the ability to influence social and environmental issues. The second most popular driver with 37 percent of survey respondents stating its importance was the ability to integrate environmental, social, and governance (ESG) goals alongside financial goals.

The value of assets allocated to ETF funds, which included environmental, social, and governance (ESG) goals in their strategy, increased markedly from five billion U.S. dollars in 2006 to 391 billion U.S. dollars in 2021. As of November 2023, allocated assets reached 480 billion U.S. dollars. Investment in sustainable funds, including ETFs, was primarily driven by developed markets mainly in Europe and the United States. What is environmental, social, and governance (ESG) investing? The ESG criteria is a set of principles used by investors to evaluate a company's performance when considering potential investments. The environmental aspect looked at the business's engagement in safeguarding the environment. From a social perspective, investors evaluated the business's impact on the local community and its relationships with stakeholders. Governance was reviewed by looking at internal controls, stakeholder rights, and executive pay. ESG factors have been an important component of investment decision-making. From a survey of 356 participants the majority of investors expected ESG to be a part of a firm's core strategy. The impact of ESG As ESG relevance has increased over recent years, many firms aimed to achieve higher ESG scores, yet the difference between the ESG scores of the largest 25 companies by market cap remains vast. Companies such as Visa and Mastercard had a ranking of 60 points or above. Commitment to ESG by high level executives had become a priority worldwide as approximately half of the senior management in France, Japan, Singapore, and Germany noted a commitment to ESG. ESG's importance had also grown among investors as approximately one-third of investors noted a willingness to divest from a firm if they felt the company had taken insufficient action to focus on ESG-related goals.

The most common method for environmental, social, and governance (ESG) investing among institutional investors worldwide in 2021 was ESG integration, meaning systematically including ESG issues in the investment decision. The share who used ESG integration more than doubled since 2019, reaching 48 percent in 2021. Overall, ESG adoption is becoming more common, and the share who did not implement ESG methods at all decreased steadily during the period.

As of 2023, Sustainalytics was the third most popular source for Environmental, Social, and Governance (ESG) data among institutional investors based in Europe. Bloomberg ranked second, with 19 percent of survey respondents stating they used this source for ESG data. MSCI was the leading source among institutional investors surveyed, with 23 percent of investors having a preference for this source.

Belarus received an overall Environmental, Social, and Governance (ESG) score of 20. This was almost 30 points below the second-lowest ranking country, Ukraine. Both Ukraine and Albania received a general "C" grade. Moldova began the "B" grades with an overall ESG score of 57.5. Those scoring 70 and above were awarded an "A" grade, with Denmark having scored the highest overall score, reaching 98.8.

In the United States and the Asia Pacific region, there was an even split among investors. Half of those surveyed from each region noted a strong focus on Environmental, Social, and Governance (ESG), while the remaining. Canada had the lowest level of institutional investors focused on ESG at 35 percent. While almost 80 percent of European institutional investors stated a focus on ESG.

Norway was the third-highest ranking country worldwide by overall Environmental, Social, and Governance (ESG) score. Finland ranked second overall with a score of 97. Denmark was the highest-ranking country worldwide, scoring an ESG rating of 98.8.

The largest socially responsible investing (SRI) and/or environmental, social, and governance (ESG) portfolio analysis services used by advisory firms worldwide in 2024 was Morningstar ESG Data, with a market share of around eight percent. None of the other SRI/ESG portfolio analysis services had a market share above two percent.

Sberbank was placed first in the ESG ranking of Russian companies as of January 2024. The company was first in the social, second in environmental, and fourth in governance indicators. Polymetal International, a precious metals mining company, ranked sixth.

As of 2024, survey respondents in Colombia, Brazil and Chile, noted having publicly reported their Environmental, Social, and Governance (ESG) practices, whereas in Mexico, a quarter of respondents stated to do so. Overall, 40 percent of companies noted having publicly report ESG.

Environmental, social, and governance (ESG) is an investment principle that focuses on environmental issues, social issues, and corporate governance. As of 2024, regions with the leading ESG consideration were North and South America, with 29 percent.

An analysis on how environmental, social and governance (ESG) scores are correlated with share market returns of companies worldwide between 2009 and 2019 shows a broad trend that:

companies with higher ESG scores generate lower returns than the average; while companies with lower ESG scores generate higher returns than the average.

However, while all ESG score providers showed a relationship between lower scores and higher returns, there was considerable difference when it came to the inverse. Data for one provider suggested that higher ESG scores on that framework generated higher returns than companies with a low ESG score, while another two providers showed basically no difference between high ESG scores and average returns. In other words, the difference between ESG scoring frameworks seems to have more of an effect on returns than whether the score itself is high.

Based on a survey conducted in fall 2018, the most useful environmental, social and governance (ESG) score provider share according to professional investors was Sustainalytics. 60 percent of respondents rated this this provider either four or five out of five for usfulness. CDP Climate, Water and Forests Scores, and MSCI rounded out the top three, with 54 and 40 percent of respondents viewing them as high quality respectively.

Competitive differentiation was the third-highest ranking Environmental, Social, and Governance (ESG) benefit among private equity (PE) firms or funds. Risk mitigation was selected by 62 percent of PE firms or funds as a benefit to their organization. Enhancement of a firm’s brand/reputation was the leading benefit of PE firms or funds derived from participation in ESG.