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2022 Outlook
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January 18, 2022

Carbon Risk, Human Capital Management to Impact Security Prices in 2022

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January 18, 2022

Carbon Risk, Human Capital Management to Impact Security Prices in 2022


2022 Outlook

Carbon Risk, Human Capital Management to Impact Security Prices in 2022

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January 18, 2022

 
 
"
We expect actions by regulators, corporations and investors to increase the importance placed on ESG factors in investment decisions across global capital markets in 2022.”
 
 
 

Washington, DC – Responsible Investing, which uses environmental, social and governance (ESG) information as one of several inputs, encompasses many issue areas. In thinking about the 2022 outlook for ESG, we believe carbon risk and human capital management are two areas that will have broad application and impact across industries and corporations — and garner the most regulatory attention.

Across global capital markets in 2022, we expect regulators, corporations and investors to place greater emphasis on ESG factors in investment decision-making. Worldwide, we are in the early stages of building the necessary capital market infrastructure to fully price companies’ greenhouse gas (GHG) emissions, people management impact, and board and employee diversity into security prices. However, the financial materiality of ESG factors is increasingly evident across multiple risk vectors, such as climate, inequality and competition for intellectual capital.

ESG Data Reporting to Be Standardized

Currently, investors receive information about companies’ carbon exposure, human capital and diversity information from a range of nonstandardized sources, such as company websites, corporate social responsibility reports, sustainability reports, company regulatory filings or simple estimates.

Government regulators around the world, however, have indicated they will begin — or advance — requirements for uniform disclosure standards around carbon, human capital and some diversity data. We expect ESG disclosure rules in major global markets, including the U.S., to have enough clarity to produce a meaningful impact on markets and security pricing in 2022. A new environment of higher-quality data may increase the need for expert ESG analysis to incorporate the information into prices of securities.

 
john.streur
President and Chief Executive Officer - Calvert
Calvert Research and Management
 
 
 
2022 Outlook: Responsible Investing - Video
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As we build the necessary capital market infrastructure to fully price ESG issues into security valuation, which we view as vital to supporting shareholder value, Calvert Research and Management CEO John Streur shares his outlook for 2022.
 
 
 
 

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Investing entails risks and there can be no assurance that any strategy will achieve profits or avoid incurring losses.

ESG Risk - Investing primarily in responsible investments carries the risk that, under certain market conditions, the funds may underperform funds that do not utilize a responsible investment strategy. In evaluating a company, the advisor is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could cause the advisor to incorrectly assess a company’s ESG performance.

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Date-of Data: December 27, 2021

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