The “G” in ESG

It is interethe G word mapsting to note that the quality of corporate governance varies more by country than by company. It is crucial to understand the legal and regulatory requirements related to corporate governance which are imposed by each country. Country-level governance also plays a very important role in creating an environment for implementing favorable policies relating to the “E” and “S”.  Countries with high scores for their corporate governance environment tend to have greater wealth, while their citizens consider environmental and social issues as more important. A good measurement of improvements in a country’s environment for corporate governance becomes a leading indicator of likely environmental and social improvements. Applying country governance is the next generation of Responsible Investing and portfolio construction should begin with the G.

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