{"id":23884,"date":"2019-02-04T12:38:29","date_gmt":"2019-02-04T17:38:29","guid":{"rendered":"https:\/\/test.greenmoney.com\/2025\/?p=23884"},"modified":"2020-01-03T14:42:17","modified_gmt":"2020-01-03T19:42:17","slug":"mscis-five-esg-trends-to-watch-in-2019","status":"publish","type":"post","link":"https:\/\/test.greenmoney.com\/2025\/mscis-five-esg-trends-to-watch-in-2019\/","title":{"rendered":"MSCI\u2019s Five ESG Trends to Watch in 2019"},"content":{"rendered":"
>> Back to February 2019<\/a><\/div>\n

The long haul many are bracing for has already started for ESG investors.[1]<\/span> Each of our five ESG trends to watch in 2019 contains potentially overlooked costs \u2013 and opportunities.<\/p>\n

The Other Trade War: Plastic Waste<\/h2>\n

China sent a shockwave through the global waste trade when it stopped accepting 24 kinds of solid waste beginning Jan. 1, 2018 \u2013 including the prevalent forms of plastic waste exported.[2]<\/span> In the wake of China\u2019s decision, exporting countries have scrambled to find new markets for their waste and some are getting serious about waste reduction regulations.<\/p>\n

More companies will potentially be exposed to plastic and plastic-related regulation beyond the obvious industries.<\/strong>\u00a0<\/strong><\/p>\n

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In 2019, we think companies and investors will be forced to contend with the new reality: waste reduction not as a marketing priority, but as a business challenge.<\/p>\n

Companies have taken notice. The number of earnings calls in 2018 that mentioned \u201cplastic waste\u201d increased by 340% compared to 2017.[3]<\/span> And it isn\u2019t just the obvious sectors that could be affected: we analyzed regulatory filings of the 2,450 constituents of the MSCI USA IMI (as of Dec. 12, 2018) to find as many as 12 relevant industries, including agricultural products and office services & supplies.[4]<\/span> While the eyes of the world focus on one trade war, the global war on waste is just beginning to unfold.<\/p>\n

Regulating the Business of ESG Investing<\/h2>\n

Most ESG-related regulations have targeted issuers. In fact, through 2018, issuer-focused regulations worldwide outnumber those focused on investors by almost 2.5 to 1.[5]<\/span> In 2019, the script could flip. Investors, both asset owners and asset managers, could see escalating demands in this arena as regulators ramp up scrutiny on the business of ESG investing. We estimate as much as USD 32.6 trillion in assets under management could be subject to pending regulations or regulations in discussion, as of 2018.[6]<\/span><\/p>\n

Number of ESG Regulations has Increased Since 2000<\/strong><\/p>\n

Are institutional investors prepared? How might they react?<\/p>\n

A number of measures seek to clarify the roles and duties of investors \u2013 mostly large asset owners \u2013 and other financial institutions. Investors may find these useful, as they ostensibly reduce the amount of second-guessing about ESG\u2019s treatment in their investment processes. But reactions to efforts aimed at classifying ESG investment products could be more equivocal and contentious, particularly for asset managers.<\/p>\n

The Not-so-Distant Future for Climate Risk<\/h2>\n

The latest Intergovernmental Panel on Climate Change\u2019s report on the impacts of global warming found that global emissions need to peak before 2030.[7]<\/span> It is a finding that puts investors on a timeline in which investment allocations made in 2019 will need to account for an accelerated carbon transition \u2013 or accelerated climate risk \u2013 at times before they finish paying out. Private assets like real estate may be especially affected.<\/p>\n

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