DWS - Wed, 07/14/2021 - 12:26

Exploring the financial materiality of social factors

In a Nutshell:

  • Covid-19 has led many types of inequalities to widen over the past year with implications for economic growth, investment returns, government policies and meeting the Sustainable Development Goals (SDGs)
  • Asset managers have a range of options to address the financial materiality of social issues. Norms-based screens can help avoid the financial risk of laggard companies or seek to profit from companies with strong practices
  • Engagement can encourage investee companies and governments to help improve equality and avoid social harm. This can be particularly effective if done through coalitions such as the "Just Transition". Private debt and equity impact investments can enhance equality by creating agricultural jobs in Africa or improving financial inclusion
  • If companies fail to respect the principles and guidelines of social norm conventions and protocols such as paying a decent wage or dealing fairly with suppliers, then ultimately they risk losing their social license to operate

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