OECD Business and Finance Outlook 2020
Sustainable and Resilient Finance
The OECD Business and Finance Outlook is an annual publication that presents unique data and analysis on the trends, both positive and negative, that are shaping tomorrow’s world of business, finance and investment. The COVID-19 pandemic has highlighted an urgent need to consider resilience in finance, both in the financial system itself and in the role played by capital and investors in making economic and social systems more dynamic and able to withstand external shocks. Using analysis from a wide range of perspectives, this year’s edition focuses on the environmental, social and governance (ESG) factors that are rapidly becoming a part of mainstream finance. It evaluates current ESG practices, and identifies priorities and actions to better align investments with sustainable, long-term value – in particular, the need for more consistent, comparable and available data on ESG performance.
ESG and institutional investment in infrastructure
The quality and design of infrastructure play a key role in shaping how we live, what we do, and how we interact in almost every aspect of life. It determines economic structures and outcomes, social systems, personal well-being, and environmental impact, as well as development pathways. Policy makers are increasingly aware of the contribution environmental, social and governance (ESG) and broader sustainability factors make in ensuring quality infrastructure investment. As institutional investors gain exposure to infrastructure through their portfolio investments, there is increasing recognition that ESG factors are relevant for their infrastructure investments. However, there are challenges in implementation, due in part to the particularities of infrastructure markets. This chapter analyses the growing use of ESG criteria in institutional investment in infrastructure, including investor motivations and objectives, as well as ESG frameworks and tools and related implementation issues. It concludes by offering options for the way forward.
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