Sustainability and Capital Markets— Are We There Yet?

In their 2016 report, called “Charting the Future of Capital Markets,” the High Meadows Institute surveyed the mainstream capital market ecosystem by soliciting the views and practices of its key stakeholders around the issue of long-term value creation. In this follow-up report, the authors report that much has changed during the past three years. The role of investors in proactively shaping corporate practices is gaining more attention as ESG issues and responsible investment have become mainstream concerns, as new responsible investment regulations and frameworks have been implemented, and as shifting demographics continue to pressure capital market participants and stakeholders to change their practices.

At the same time, the report notes significant remaining challenges. The lack of a standard industry definition and framework for ESG data and reporting on ESG continues to be a significant impediment, as does the shortage of qualified ESG analysts and infrastructure to support true ESG integration. Surveys also suggest most corporate boards have yet to recognize the full significance of ESG integration or its value to the firm.