I saw an interesting item today, from Mercer (it's posted on CanadaIT.com): "Mercer clients to receive ESG ratings in key reports." In it, Mercer announces that its "proprietary environmental, social and governance (ESG) ratings will be included in client reports related to manager searches and performance. This inclusion reflects Mercer’s view as to the importance of ESG factors for long-term investors and increased client interest in ESG issues." The release goes on to quote the company's Global Chief Investment Officer as saying "ESG factors have the potential to become more important risk-return drivers."

It's possible to view regulations and rising energy costs as the "sticks" that drive sustainable IT initiatives (and sustainability initiatives more broadly). The most commonly-cited "carrots" have been consumer and employee interest - which are compelling in some areas, but not all industry sectors.

Investment management rankings, though - seen either as "stick" or "carrot," that's a powerful lever to impel action on sustainability issues. Kudos to Mercer for highlighting the issue for an audience (investors) that matters tremendously across the economy!

I think the biggest "carrots" are energy savings, performance improvements, and risk reduction that companies experience as a result of effective sustainability programming. These are all indicators that are of interest to the investment community, and go some way to explain why the disciplined approach that Mercer is hoping to introduce with its new rating system should be attractive to others in this group. The announcement also demonstrates further penetration of multi-layered sustainability thinking into corporate entities which are now apparently seeing more "carrot" than "stick."