Environmental, social and governance (ESG) criteria has slowly made its way from the periphery of institutional investors' focus toward the mainstream. The movement has been more pronounced in Europe than in the U.S., but it continues to gather momentum in both places.

A new report by RCM has found that institutional investors that take ESG issues into account as they select stocks can boost their returns, albeit marginally. aiCIO quotes the report: "The perception that corporate efforts to become more sustainable reduce the value of companies and of investors' portfolios is entrenched, but is based on largely unfounded assumptions and only thin academic evidence. It is imperative to challenge this perception empirically because it is holding back the evolution of the nascent sustainability sector and of the wider corporate sector."

This is not the definitive word on the issue, but it does reflect where things are heading. aiCIO notes that in September of last year, a group of institutional investors "pushed global listing authorities and stock exchanges to demand that sustainability reporting become a part of their listing rules."

It's unclear if we'll see the U.S. exchanges or the SEC approve a hard and fast rule requiring this sort of disclosure. If it didn't make it into Dodd-Frank, it could be a while before it's law, but you never know. Companies should probably start thinking about how they want to voluntarily disclose their good news in these areas. If you have a strong story to tell, you might as well get it out.

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