Environmental, social and governance (ESG) investing is a relatively new term, and idea, among institutional investment managers. In 2004, then U.N. Secretary General Kofi Annan asked 50 CEOs of major financial institutions to participate in an initiative of the U.N. Global Compact, the Swiss Government and the International Finance Corp. The point of the exercise was to incorporate ESG issues into capital markets.
This action eventually led to the creation of the Principles for Responsible Investing (PRI) in 2006 and the creation of the Sustainable Stock Exchange Initiative in 2007. As of March 2020, there were 3,038 U.N. PRI signatories with more than $103 trillion of assets under management. Saying the idea has taken off would be an understatement. But how and why does the incorporation of ESG play into the thinking of institutional investors seeking out large infrastructure projects?
As institutional investors seek out infrastructure investments for their long-term