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The making of subprime in sustainability

There is a material possibility that investee companies considered prime in the ESG (environmental, social and governance) rankings by asset managers may in fact be subprime.

If public announcements from global financial institutions are to be believed, 2018 may be remembered as the year when the primary goal of business became more than business. On 16 January, BlackRock, the world’s largest asset manager with $6.3 trillion under its management, in a letter warned CEOs (chief executive officers) of companies whose stock it owns to pay close attention to their environmental, social and governance (ESG) performance or risk losing BlackRock’s support. Two weeks later, a group of institutional investors, led by Vanguard, managing assets over $15 trillion made a similar announcement about the need for companies to focus on their interactions with society. ...more