Professional investors in the UK are expecting a greater focus on ESG (Environmental, Social and Governance) issues in small and microcap companies, new research from investment holding company MBH Corporation shows.
The study, among UK-based professional investors managing a collective £83.2 billion who specialise in small and microcap investments, found that 87% of respondents believe the focus on ESG issues will increase over the next 12 months, with 31% expecting a dramatic increase in the next year.
ESG criteria are a set of standards for a company’s operations used by socially-conscious investors to screen potential investments focusing on environmental issues, social issues such as relationships with employees, suppliers and local communities and governance issues relating to a company’s leadership.
According to MBH, increased focus and investment on ESG will be accompanied by enhanced reporting and transparency from companies on their ESG policies and strategies, with 92% expecting the level to increase, including 49% who expect a dramatic increase.
Callum Laing, CEO of MBH Corporation, said: “ESG might be flavour of the day for investors right now, but whether it is called ESG, CSR, or Social Entrepreneurship, most small businesses - certainly the ones we work with - have been doing this in one form or another for decades.
“Our clients and most definitely our team members needed to know that their companies stood for something more than just selling widgets.
“We welcome the focus from investors and the opportunity to use third party benchmarking to create a common language around the ethos that is already deeply ingrained in many great companies.”