Universal ownership perspective: Incorporating ESG metrics to monitor and manage externalities

In recent years, the potential risks and opportunities associated with environmental, social, and governance (ESG) factors has gained significant impetus with institutional investors. The active engagement by these investors with ESG factors aligns with the increasing recognition of the universal ownership concept. This idea emphasizes the interconnectedness of all economic actors and the long-term implications of their actions for the global economy and society. In this chapter, we explore the universal ownership role of institutional investors in advancing ESG issues through the incorporation of externalities and impact investment, as well as shareholder engagement to push for companies to incorporate an ESG performance focus.