The year 2021 was hectic, to say the least. There has been a rampant increase in social justice, ranging from climate change awareness, police brutality, racial injustice, and more. To cater and capitalize on these issues, companies around the globe have “successfully [pushed] companies and regulators to make changes amid record inflows to funds focused on environmental, social, and corporate governance (ESG) issue”(Kerber).
One benefactor to the rise in ESG funding was when the chief executive officer at BlackRock (the largest investment management company in the world) declared that a fundamental reshaping of global capitalism was underway and that his firm would help lead it by making it easier to invest in companies with favorable environmental and social practices. This made many companies desire funding from investment managements to implement ESG goals in their marketing systems, hence the “record inflows to [ESG] funds”. With Blackrock shifting sustainability as their new standard for investing, “A record $649 billion poured into ESG-focused funds worldwide through Nov. 30, up from the $542 billion and $285 billion that flowed into these funds in 2020 and 2019, respectively, the latest Refinitiv Lipper data shows. ESG funds now account for 10% of worldwide fund assets” (Jessop).
Furthermore, the obvious consequences of climate change and social injustice occurrences such as the killing of George Floyd in Minneapolis have "contributed to ESG climbing to the top of the agenda of investors, firms, and politicians" (Kerber). Stocks of firms that ranked well for their environmental initiatives increased as well. The MSCI World ESG Leaders' index has surged 22 percent so far this year, compared to a 15 percent gain for the MSCI World Index, indicating the increased influence of events in 2021 on the rise of ESG in firms.
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