STATE STREET GLOBAL ADVISORS
“ The majority of our assets under management are invested in index funds , which are investment funds that track a specific benchmark index , such as the S & P 500 or the FTSE All- Share .” he says .
Such indices are essential for potential investors , who use the information provided to guide their investment choices . With ESG considerations becoming ever - more important-across general society as well as via governments-companies that have previously fallen short are scrambling to demonstrate their dedication to diversity and sustainability .
For more long-serving business leaders , who are often opposed to change , this new climate of transparency and accountability is difficult to get their heads around - and they don ’ t have long to do so .
“ We believe a company ’ s ESG rating will soon effectively be as important as its credit rating ,” Vernardis states , highlighting the increasing transactional value of social and environmental issues at a corporate level .
ESG : Making an Impact Through Engagement and Voting The key to being a company that ’ s considered socially responsible is demonstrating a genuine commitment to change and avoiding surfacelevel PR stunts .
Whether that means an overhaul of systems and structures , bringing in outreach initiatives , or setting up alternate recruitment campaigns , there are plenty of starting points from which corporate teams and shareholders can motivate social progress alongside economic prosperity .
“ An index fund is essentially near-permanent capital . Unlike active managers , we can ’ t walk away from a company as long as it remains in the index .”
So then how exactly can an index manager instigate change at a senior level ?
“ If we don ’ t like what a company is doing but we can ’ t sell out , using our voice and vote as shareholders is key to promoting positive change and long-term value creation ,”
94 April 2022