Environmental, social and governance (ESG) investing is the way of the future, according to a report by State Street Corporation.

The report, Sustainable Investing: Positioning for Long-Term Success, states that issues such as world population growth and climate change are transforming sustainability into “a material issue for companies and investors alike.”

Investors are advised to align themselves with this trend now to reap the benefits in the future.

The report says that although once viewed as a marginal investing “fad,” ESG investing is gaining momentum as global macro-trends increasingly point to a “sustainability crisis” taking place around the world.

The report is a precursor to a new State Street Global Investors (SSgA) study, scheduled to be released later this year. That study examined ESG in bear market periods and found that high-scoring ESG companies suffered less during the 2008-2009 downturn.

“The new emphasis on sustainability is changing the rules of the institutional investment world,” said Chris McKnett, vice-president of ESG investing at SSgA. “As ESG factors are increasingly mandated by investors, those companies with favorable ESG ratings are likely to become the preferred holdings.”

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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