Despite recent uncertainties, new research from Cambridge Advance Online reveals a sharp rise in interest in ESG investment opportunities, with 12-monthly UK Google Trends data showing significant growth in related searches.
The topic of Socially Responsible Investing has grown interest by 200% while “ethical investments UK” has become a breakout search term (>5,000% increase). “ESG investments” (+350%), “ethical investment companies” (+160%) and “ESG stocks” (+70%) have also seen rises.
More people are seeking certifications in ethical investing – search terms such as “ESG investing CFA” and “certificate in ESG investing” have surged in interest at +2,200% and +1,600% respectively.
The number of people searching for company ESG ratings has risen significantly, with a 100% increase in interest for “S&P global ESG scores”.
Why the interest in ESG investment strategies?
This surge in interest comes amid growing uncertainty in the US following President Trump’s election, alongside increasing caution from asset managers facing heightened regulations, a rising anti-ESG sentiment, and ongoing greenwashing accusations.
In the UK, stricter enforcement is also taking shape this month, as businesses making environmental claims that breach consumer law and fail to comply with the CMA’s Green Claims Code now risk fines of up to 10% of their global turnover or £300,000, whichever is higher.
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However, a 2023 IBM study revealed that organisations seen as leaders in ESG are 43% more likely to be more profitable than their peers, which asset managers and investors appear to agree with. According to a recent Morgan Stanley survey, 78% of asset managers and 80% of asset owners globally expect assets in sustainable funds to grow in the next two years.
Effective risk management is critical
With investor and consumer interest in ESG on the rise against a backdrop of increased regulatory scrutiny and market uncertainty, effective risk management is more critical than ever. Cambridge Advance Online’s ESG Risk Management course lead, Martin Massey, shared his expert advice drawn from over 30 years of experience in the field.
To mitigate risks, Martin urged businesses to maintain high standards of corporate governance, including transparent practices and effective board oversight. Using risk management as a framework will enable business leaders to understand their exposure to ESG and the opportunities it might bring them.
“Companies are generally shifting their broader purpose and focusing on becoming more sustainable”, Martin said. “There’s also a broader shift around purpose in the culture of organisations. But often overlooked is the fact that ESG also helps to make companies more resilient as well.”
While sometimes slower to take immediate action, investors are increasingly asking probing questions about companies’ ESG practices. This heightened scrutiny will force many businesses to re-evaluate their ESG approach, recognising that, while investor demands may not yet be fully mandatory, the tide is turning.
When managing ESG risks, businesses must consider a broad range of factors, moving away from simply being an exercise in compliance. From a risk perspective, it’s the risk appetite framework that companies should be reviewing and changing. This needs a comprehensive approach, incorporating a robust framework with the right mix of policies and procedures, technologies and training opportunities.
ESG risk management goes beyond regulatory compliance – it also strengthens resilience and the ability to adapt to changing market conditions today and into the future. By integrating ESG into existing risk frameworks, companies can manage risks more proactively and build long-term value, while meeting the increasing demands of investors, customers and regulators.
