ESG in ‘23: MSCI report round up

2022 has thrown the world into disarray; with geopolitical tensions rising and conflict waging in Europe, global energy crises, soaring inflation and living costs, and catastrophic climate events disrupting everyday life for many around the globe. As ESG has become the ‘new normal’ in the investment world, it has simultaneously grown politicised and polarised; challenges likely to develop in the year ahead.

MSCI have recently published their 11th annual ESG & Climate Trends report – a comprehensive examination of over 30 emerging risks and opportunities facing investors worldwide next year (2023) and beyond. With this valuable insight at hand, investors have an edge in preparing themselves with knowledge that could make or break success amid such tumultuous times.

A summary of the key themes covered

Seven umbrella themes cover the 32 identified trends included in the 2023 report, including: 

  • Changing governance, looking at how changing corporate board demographics might impact say-on-climate and other proxy voting trends
  • Responses to regulation, watching for changes in ESG fund names and labels as unfolding disclosure regimes hold managers to stricter account
  • Innovations in the supply chain, including how blockchain could help supply chain controversy
  • Work life changes, such as the impacts of more frequent worker strikes and poor air quality 
  • Turning points for ESG assets, including the future of green bonds, energy security and nuclear energy
  • New frontiers in measurement and transparency, with pressure mounting on insurers and banks to expand disclosure
  • New investments, from lab-grown commodities to carbon as an asset class, as well as exploring climate adaptation

The subjects of climate change and increased regulatory requirements are touched on a number of times. “It is not surprising that many on our research team touch on climate change across a variety of angles: from carbon credit funds to insured emissions, and from scrutiny of net-zero targets to decarbonising industrial real estate… With the focus on corporate climate targets likely to intensify and regulations around disclosure likely to tighten, investors should be able to make better informed climate-investing decisions going forward,” says Meggin Thwing Eastman, Managing Director and Global ESG Editorial Director at MSCI.

Tightening legislation

A string of new rules and regulations to try to stem the rise of greenwashing by both companies and the fund management industry highlight anticipated regulatory focus on credible climate targets. The European Union will implement a series of measures with increased stringency. These include the introduction of deforestation-free market-access rules and mandatory reporting on Principle Adverse Impact indicators such as GHG emissions and toxic waste, in addition to instituting climate stress tests for global and regional banks.

Strengthening data strategies and disclosure

2023 is the year to turn sustainability commitments into action. We anticipate growing demand for accountability and credible disclosure, and greater regulatory scrutiny.

Asset managers must participate in meaningful discussion between investors and portfolio companies about financially material sustainability risks and opportunities. Our all-in-one data capturing system, SI Engage, will help you plan, track and report on activity across your portfolio companies in preparation for the changes, and challenges, ahead. Find out more today.


Sign up for weekly insights, including SI Engage and industry news