Customers are becoming increasingly conscious of the adverse impact of climate change on livelihoods, economies, and societies as a whole. It is impacting customer preference and consciousness. Companies with environmentally friendly policies, governance, products, and services supporting societal desire to be climate-friendly are preferred over others.
The customer is driving companies to adapt and adopt climate-friendly business processes, build environmentally friendly products, adopt governance processes that are socially and environmentally friendly.
Investors are in the business of deploying financial assets for profit. Therefore, it is natural for funds to identify funding businesses aligned to customer preferences.
It is in this context that we need to see ESG funding. Funds evaluation processes are now factoring in climate risk when calculating investment returns. They also look at the internal governance processes of companies to see if they are compatible with societal preferences towards a greener, climate-friendly world.
As good businesses, ESG funding aligns themselves with the customers of companies they plan to invest in because this alignment will give them superior returns.