WEF Says ESG Initiatives Require Solid Economic Fo

WEF Says ESG Initiatives Require Solid Economic Foundations

Over time, ESG is becoming more important to investors and in turn, companies. A survey conducted by McKinsey revealed that roughly 85% of Chief Investment Officers held the opinion that ESG played a key role in their investment decisions. The survey also determined that about 60% of respondents examined their portfolios for ESG issues, with another 80% assessing how ESG factors influenced projected cash flows.

Additionally, a study by the NYU Stern School of Business has identified a strong correlation between financial performance and ESG.

Given that companies receive substantial ESG investments and the benefits of these initiatives are primarily evident in the long-term, there is need to encourage additional investments while maintaining profitability to ensure continued support from stakeholders. This suggests that for ESG criteria to be effectively enforced, it is essential to implement initiatives grounded in a solid economic foundation.

Experts also believe that if these initiatives are to provide benefit over the long-term, it is important to establish a market economy, an ecological economy, and a social economy. These economies, together with sustainability, may bring about prosperity.

However, experts continue, there is also need to focus on innovation and education for continued success. Education is known to foster innovation and improve economic productivity, with educated persons also earning higher than their less-educated counterparts. Studies have shown that higher education levels contribute to the expansion of human capital in OECD economies, thereby strengthening the production and application of knowledge-based capital.

Knowledge-based capital drives innovation as well as the development of new technologies and patents, which in turn contributes to economic growth. Experts believe investing in knowledge-based capital is important for societal progress, arguing that hesitating may see organizations miss out on opportunities for economic gains and innovation as other players secure essential tech and progress in research.

A good example of missing out on key opportunities would be China and South Korea progressing rapidly in advanced manufacturing and robotics, a field that was previously dominated by Germany and Japan. Another example would be South Korea managing to implement 5G tech, supported by substantial investments in innovation and infrastructure. Its progress contrasts with the uneven pace of 5G adoption in other nations around the globe.

China has also adopted green technologies at a faster pace than the West, allowing the East Asian nation to maintain its position as a leader in electric cars and the production of solar panels.

As efforts to educate the masses about ESG initiatives gather momentum, the uptake of the products and services offered by companies like Energy and Water Development Corp. (OTCQB; EAWD) could also increase in different markets.

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