There is a growing demand for socially responsible investing. Some $23 trillion in assets are currently allocated to such investments, and an increasing number of investors seek products and firms that can deliver both returns and societal benefits. Stakeholders as varied as customers and governments are pushing companies to help solve challenges such as climate change and economic inclusion.
Investors themselves have an increasing desire to understand the risks from these challenges. Recently, for instance, more than 150 financial companies with $82 trillion in assets (collectively) signed on to the recommendations of the Task Force on Climate-Related Financial Disclosures. This focus will only grow, particularly in light of mounting evidence that addressing social issues does not detract from financial performance. As earlier BCG research has shown, the two objectives of total shareholder return (TSR) and total societal impact (TSI) can reinforce each other; companies with greater TSI performance can also have greater financial performance.
What’s more, socially responsible investing makes firms more attractive to prospective employees, giving such firms an edge in the war for talent. In our experience, employees in investment firms are passionate about what they do and are motivated by far more than a singular pursuit of financial returns. They recognize that capital can be used to unleash societal progress and impact. Without a clearly articulated authentic purpose, however, few organizations will capture that underlying excitement and realize the full potential of their societal impact.
Find out more about how institutional investors are changing the investment game by reading our white paper: Institutional Investors Discover the Power of Purpose.
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