Timeline of ESG
1960’s – As per “ESG – A Brief History of its Development”, ESG started when the book “The Silent Spring” was published. It tackles the environmental effects of using pesticides. This was also the start of environmental movements making corporations accountable for the dangerous effects of their activities. This results in investors removing certain businesses from their portfolios.
1980’s – ESG helped in ending Apartheid (racial segregation) in Africa. Many U.S corporations divest themselves from South Africa resulting in economic instability. At this time, the “Comprehensive Anti-Apartheid Act” was passed, which outlawed any additional investments.
1990’s – United Nations Framework Convention on Climate Change, also known as the “Earth Summit” was established in 1992. It was signed by 154 states in Rio de Janeiro. Its goal is to maintain a good level of greenhouse gas concentrations to hinder any human-related changes in the climate. Global Reporting Initiative (GRI) was also founded in Boston in 1997. This is an independent organization that assists businesses to be accountable for their impacts. It also allows companies to prove their responsible environmental business credentials.
2000’s – United National Global Compact is launched. According to Kayla Barnes “A History of How Modern ESG Came to be”, Global Compact was a call to companies to align strategies and operations with universal principles. In 2004, it also published guidelines for companies to include ESG in their operations – “Who Cares Wins – Connecting Financial Markets to a Changing World”. Different boards and conventions were also launched (Sustainability Accounting Standards Board and United Nations Framework Convention). Its main point was to have a standard sustainability, accounting and standard sustainability, accounting and measurements across 77 industries.
2020’s – COVID19 pandemic brought economic instability resulting the World Economic Forum International Business to Committee to publish 22 ESG metrics. Lary Fink, CEO of Blackrock also reiterated that the time to act is now. ESG is the main focus on his Annual Letter to Shareholders last 2021. He explained the impacts of the pandemic and how companies should play a vital role in making the world a better one.
ESG still plays an important role for investors and general managers. It still shows that markets that do well in ESG also perform well in a financial view. ESG shows no indication of slowing down and still in an upward trend.
These key events have shaped what ESG is and its three pillars: Environment, Society and Governance.