Expanding the Investment Frontier: Factoring Environmental, Social and Governance Criteria into Investment Analysis

This report is guided by recommendations from the UN Global Compact 2004 report Who Cares Wins: Connecting Financial Markets to a Changing World, which was a joint initiative of 20 financial institutions, and results from the Working Group to Integrate Environmental, Social and Governance Risk Factors in Financial Market Practice. The Working Group brought together professionals directly involved in the valuation process. This report addresses the tension that currently exists between longer-term “value” investment strategies and short-term “growth” investment strategies by devising an approach to bridge the two. By developing an appropriate and relevant framework for integrating these issues into the investment analysis process, the group sought to increase understanding of the importance of ESG factors in guiding value investment strategies.