In recent years, clients and investors alike have become increasingly interested in ensuring that the companies with which they do business and invest in engage in socially responsible business practices. In fact, this demand has led to the creation of certain Environmental, Social, and Governance (ESG) criteria, which investors use to screen investments. Indeed, research shows that in 2020, 85% of investors said they considered ESG factors in investing. Investors can assess companies’ ESG performance through reports and ratings created by third-party providers.
The “social” component of ESG includes diversity, equity, and inclusion (DE&I) initiatives. DE&I initiatives have been common within U.S. companies for decades. What was once viewed as largely a western concept, however, has become more common throughout the world. The expansion of DE&I initiatives throughout the world is due to a confluence of factors including globalization, demand for such programs from clients and investors, and the spread of social movements such as “#MeToo” and “Black Lives Matter” beyond the borders of the United States.
