What is ESG Integration

Sustainable finance proponents argue that integrating environmental, social, and governance (ESG) factors into investment decisions should have a positive long-term material impact on financial performance and ultimately benefit wider society as a whole. This chapter is based on interviews and an ESG materiality survey that was run among 20 prominent South African asset managers. The results demonstrate that if there is a growing awareness of ESG factors among the respondents, there are some perceived tensions around how to practically embed ESG factors within investment processes. In addition, the results show that the integration of ESG factors into financial valuation are not yet mainstream and that more needs to be done to demonstrate how the integration of ESG factors within investment processes materially impacts financial performance and meanwhile contributes to the sustainable development of economies.