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The Investor Revolution - Coggle Diagram
The Investor Revolution
What's driving change?
The size of investment firms
Large investment firms are now so big that cannot be used to mitigate system-level risk
The large asset owners have long-term liabilities
Financial returns
ESG issues => financial performance (positive relation)
Good demand
The investors aware that sustainable investing improves their returns
also focused on the non-financial outcomes
An evolving view of fiduciary duty
The recent legal opinions and regulatory guidelines that ignoring ESG factors is a violation of fiduciary duty
Trickle-down within investment firms
ESG analysis is being integrated into the fundamental financial activities
More ESG activism by investor
The ESG activism investors are on the rise in markets, and corporations want to attract them
The problem and new outlook
The problem
Investment firms are now too large to diversify away from systemic risks
The investors aware of the importance of these ESG issues to maximize their long-term value
New outlook
ESG is top criteria when these executives of global institutional investing firms make business decision and they have to be accountable by shareholders for their ESG performance.
Preparing for a new era
Articulate your purpose
fundamental for board effectiveness
Improve engagement with shareholders
The State of Purpose
An intergrated report
Eleminate earing guidance
Increase involvement by middle managers
To commit resources for achieving strategic objectives
Evaluate and reward middle managers on both financial and ESG performance
Invest in internal systems for ESG performance information
To put the standards into practice
The software vendors that provide financial information to extend into ESG metrics
To press their audit firms to provide assurance on reported ESG performance
Improve measurement and reporting
Measuring the positive and negative effects of the firm's products and services on society
What's holding back?
Need improving the quality and availability of information
Informations lack of comprehensive, data is not perfect and no standards are used by the government
The reported numbers are rarely subject to a rigorous audit by a third party