Market Commentary
ESG can’t be ignored in investment decisions
Will Hamilton, The Australian
The dramatic closure of the Hazelwood coal power station in Victoria may well be a key moment in history — and in the wider nature of how we go about investing. Capable of producing up to 25 per cent of the state’s power needs and employing more than 900 people, the facility had operated for half a century but the French owner Engie last week outlined plans for a complete shutdown of the plant early next year.
Events such as Hazelwood prompt us to look more broadly at investment issues in the area of ESG or environment, social and governance. ESG factors have now come into the mainstream of investment decisions and are incorporated into analysis towards achieving risk reduction and protecting shareholders. In short they are now significantly affecting the value of a company.
The United Nations Principles of Responsible Investment (UNPRI) “recognises that the generation of long-term sustainable returns is dependent on stable, well-functioning and well governed social, environmental and economic systems”. I should point out that while the UNPRI is both voluntary and aspirational it has been developed with some of the leading investment managers, and provides a framework for integrating ESG into investment-making decisions.
The rest of this article can be found at www.theaustralian.com.au.
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