Sustainability · 4 of 4
Finance
Advancing environmental, social and governance performance is an opportunity to reduce and mitigate material risks and discover avenues for value creation.
Environment · Social · Governance · Finance
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Investors
Increasingly, investors are looking at environmental, social and governance factors to assess the risks and value of companies and derivative investments. These factors can provide signals about both internal factors (such as forward-looking management) and external factors (such as the business environment). Fund assets managed with a responsible or sustainable approach reached 16.7 trillion United States dollars (USD) by the Global Sustainable Investment Alliance’s review of November 2025, up 49 percent in two years, and about 5,300 asset owners and managers representing about 128 trillion USD are signatories to the Principles for Responsible Investment (PRI), the world’s leading proponent of responsible investment, which works to understand the investment implications of environmental, social and governance factors and to support its signatories in incorporating them into investment and ownership decisions.
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Companies
The benefit to companies with advanced environmental, social and governance practice extends beyond attracting and retaining investment. How exactly does a strong environmental, social and governance proposition make financial sense?
- Top-line growth. Retain and gain customers from new sustainable products and services; increase access to resources through strong community and government relations.
- Regulatory and legal interventions. A robust environmental, social and governance strategy aligns with regulatory and legal strategy, and can earn government subsidy and support; a poor one can incur legal and regulatory intervention.
- Investment and asset optimisation. Increase the rate of return through strategic investment, asset allocation and sustainable capital expenditure; avoid costly mistakes from stranded assets and write-offs.
- Cost reduction. Through environmental, social and governance strategy and frameworks, lower costs through decreased consumption of inputs such as water and energy.
Sources: Gunnar Friede et al., “ESG and financial performance: aggregate evidence from more than 2,000 empirical studies”, Journal of Sustainable Finance & Investment, October 2015, volume 5, number 4, pages 210 to 233; Deutsche Asset & Wealth Management; McKinsey analysis.