What type of investors are typically influenced by ESG requirements?

Institutional investors are significantly influenced by ESG requirements due to their larger investment portfolios and fiduciary responsibilities. These investors are often tasked with managing substantial funds for a wide array of stakeholders, including pension funds, insurance companies, and mutual funds. Because these stakeholders increasingly demand transparency and sustainability in how their investments are managed, institutional investors have become leaders in the integration of Environmental, Social, and Governance criteria into their investment strategies.

As these investors seek long-term returns, they recognize that companies with robust ESG practices are often better positioned to mitigate risks and seize opportunities. This trend is driven by growing evidence that ESG factors can impact financial performance, leading institutional investors to favor companies that demonstrate a commitment to sustainability and responsible governance.

While individual retail investors, risk-averse investors, and foreign investors may also consider ESG factors, the influence is particularly pronounced among institutional investors due to their scale, ongoing commitment to sustainability, and the pressure from clients and regulatory frameworks to adhere to responsible investment principles.