ESG Integration Becoming Mainstream

Nasdaq CEO Adena Friedman outlined her belief that ESG integration is finally becoming mainstream in the U.S., in a LinkedIn post ahead of the World Economic Forum in Davos, Switzerland.

“Last year, I predicted that 2019 would be a big year for the emergence of ESG, and there were real signs of progress – particularly as ESG decision-making rose to the Board C-suite level across many industries,” wrote Friedman, “2020 is increasingly looking like it may be the ‘tipping point’ year for ESG investing.”

Record inflows into ESG funds

While noting that ESG integration in the U.S. is lagging that in Europe, Ms. Friedman pointed to significant progress in the past year, including record net inflows of $18 billion into ESG-related ETFs and mutual funds through 2019. ESG Today recently reported that net flows into sustainable funds in the U.S. smashed records in 2019, achieving nearly 4x the prior record set in 2018.

Ms. Friedman’s post made special note of BlackRock’s recent commitment to make sustainability a core part of their investment strategy, believing it will serve as “a wakeup call to boards and CEOs everywhere.”

ESG integration drivers

In addition to investor demand, Ms. Friedman predicts that sustainable business practices will be driven by an emerging revolution in corporate culture, writing that in the coming year, “there will be a convergence and culmination of years of pressure building within corporations to embrace a broader social purpose while continuing to deliver for investors and owners.”

While noting the significant geopolitical risks facing the global markets in the new year, Ms. Friedman is optimistic that from an ESG perspective, “2020 could be a monumental year for both profits and purpose.”