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Environmental, Social, Governance
Environmental, social and governance factors are the main factors deciding a company’s or an investment’s sustainability footprint.
The years since 2022 have changed the market for environmental, social and governance investing rather than ended it. Funds labelled sustainable saw their first year of net redemptions in 2025: 84 billion United States dollars (USD) left them worldwide, against 38 billion that arrived in 2024. Political pressure in the United States and a weaker case for the label in Europe are behind the figure. Even so, fund assets managed with a responsible or sustainable approach reached 16.7 trillion by the Global Sustainable Investment Alliance’s review of November 2025, up 49 percent in two years. Money left the label in 2025. The factors stayed, because the risks they describe did not move.
The rules have consolidated. The International Sustainability Standards Board (ISSB) published its two standards in 2023, and by March 2026 more than forty jurisdictions had adopted them or were taking steps to. The European Union (EU) narrowed its Corporate Sustainability Reporting Directive (CSRD) in 2026 to companies with more than 1,000 employees and 450 million euros in turnover, for financial years beginning in 2027. Roughly nine in ten of the 50,000 companies the directive once reached fall out of scope, by the Commonwealth Climate and Law Initiative’s estimate, leaving about 5,000 to report in one common language.
Frameworks and methods have advanced along with the tools. The complexities and changing dynamics of environmental, social and governance factors still require more accurate and timely data to support better models, and there remain critical gaps, especially in certain industries and certain parts of the world.
Advances in technology and new data sources, among them satellite observation, open public records and language models that read disclosures, are lowering costs and widening access to environmental, social and governance intelligence. The firm’s work on that data since 2016 is the WhiteBox Platform.
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Sources: Global Sustainable Investment Alliance, Global Sustainable Investment Review 2025, 11 November 2025; Morningstar, Global Sustainable Fund Flows, fourth quarter 2025; IFRS Foundation, update on the ISSB’s activities, April 2026; Directive (EU) 2026/470; Commonwealth Climate and Law Initiative, CSRD reporting post-Omnibus I, December 2025. Further reading: sustainable investing; ESG integration for equity investing.