Some of the world’s most sophisticated investors have been using Environmental, Social, and Governance (ESG) data for years to help identify companies that perform well over time in the market.1 Their belief that high ESG scores correlate with high corporate financial performance is now supported by a large and rapidly growing body of research. Deutsche Bank’s much-discussed study, for example, found that 2,200 of ESG studies conducted between 1970 to 2015 report a positive ESG–Corporate Financial Performance (CFP) relation.2
The metrics used in these ESG frameworks are constantly evolving, however. Everything from changing regulations to technology has contributed to the debate over which ESG metrics should be reported (i.e., materiality) and how these items should be measured (i.e., standardization).
Now, compelling new research is pointing to health and well-being as the next big material element investors should be incorporating into their ESG analysis.