Election results in the U.S. and U.K., and 2017 elections in several European countries, may fuel more of an inward focus, tamping down aggressive climate-change goals and other environmental, social and governance (ESG) efforts.

1. Global ESG 2017 Outlook
Gregory Elders, Shaheen Contractor
Bloomberg Intelligence analysts

2. Election results in the U.S. and U.K., and 2017 elections in several
European countries, may fuel more of an inward focus, tamping
down aggressive climate-change goals and other environmental,
social and governance (ESG) efforts.
While the strong hand of regulatory support may weaken, it
isn’t disappearing, nor will demand and cost trends that impact
companies. Investor focus on ESG will intensify, as over half of
European assets and 20% in the U.S. consider such factors, and
efforts in Japan have increased.

3. Low carbon wind tempered, momentum carries forward

4. President-elect Donald Trump’s victory took the wind out of the
low-carbon transition sails, but momentum from efforts at the state
level, other countries and technology cost trends means efforts
will continue, even if clouded.
China’s plans to implement a national emissions trading scheme,
alongside new taxes in other countries, will keep the pressure
on cutting carbon. Battery and plug-in electric vehicles growing
to 1 % of global auto sales so far in 2016 points to longer-term
oil demand pressure.

5. Green bonds may lead hesitant clean-finance growth

6. Green-bond issuance growth may need to power climate
change-related financing higher if renewable energy investments
stagnate. Clean-energy investment through 2020 may stagnate
shy of 2015’s $349 billion peak, after dropping 15-20% in 2016,
according to Bloomberg New Energy Finance.
In contrast, the broader green bond market that finances efforts
including low-carbon energy, transport and buildings may build on
its record-breaking issuance, powered by continued Chinese efforts.

7. Gender pay-gap scrutiny drives corporate cleanup

8. Companies will need to spend 2017 identifying and addressing
gender pay-gap issues ahead of U.K. reporting requirements
in 2018 and potentially more investor proxy proposals in the U.S.
Women are slowly making headway in company board rooms,
holding a median 20% of seats across S&P Global 1200 index
members. Companies reporting on and achieving grade and pay
parity could do more to help attract and retain diverse talent than
focusing on just their director ranks.

9. Companies beware drawing investor governance wrath

10. Shareholder voting power is a rarely wielded tool, yet investors
may be more willing to exercise their voice in perceived egregious
situations. U.S. companies are increasingly relenting on proxy access
measures to allow director nominations, and Japanese investors
are under government pressure to be more forceful in prodding
companies to boost performance.
Many investors may be hesitant to rock the boat, but companies
that draw scrutiny for poor governance practices may incite
shareholder wrath.

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