Environmental, social and governance investing gained huge momentum in 2020 and appears poised to continue growing in 2021. We talked to experts from across the sustainability world about the trends that will drive ESG in the latest episode of ESG Insider, an S&P Global podcast.

Read on, or listen to the podcast on SoundCloud, Spotify or Apple podcasts to learn what to expect in 2021.

The new Biden administration will reinvigorate ESG policies in the US

In the U.S., the incoming administration is voicing strong support for climate initiatives, including a commitment to rejoin the Paris Agreement on climate change on Day 1.

President-elect Joe Biden will bring "a change of tone when it comes to the significance of the threat around climate change," said Carlo Funk, EMEA head of ESG Investment Strategy at State Street Global Advisors Inc., one of the world's largest asset managers with more than $3 trillion in assets under management.

That change in tone will have global ramifications.

"That's also going to lead to much more desperately needed cross-border collaboration around climate efforts," Funk said in the episode. “The new Biden administration is going to be a big advocate for this."

That marks a sharp shift from the outgoing administration of President Donald Trump, which has taken steps to dismantle policies seen as friendly to the ESG movement.

Matt Patsky, CEO of sustainable investment firm Trillium Asset Management LLC, pointed to "incredible momentum building" in ESG investing in recent years.

"We know that the current administration about to leave office on Jan. 20 really has been trying to do everything they can to try to slow that momentum," Patsky said in the episode. "So what 2021 looks like to us — it looks like we will be getting, hopefully, support from the Biden administration on reversing some of those roadblocks and seeing some exponential growth in the adoption of ESG strategies."

Conversations about the energy transition will become increasingly nuanced

In 2020, a lot of companies committed to reduce their carbon footprint or set goals to reach net-zero emissions. State Street's Funk expects the conversation around the energy transition to be "a lot more nuanced in 2021 and a lot less black and white" as energy companies start to verbalize clear targets to transition to a lower carbon economy.

"We see, for example, in Europe, that more and more clients are starting to divest from fossil fuels. On the one hand, that will immediately lower the carbon footprint of your portfolio," Funk said. "On the other hand, we see that big incumbent energy companies are starting to make the transition — not all of them, but some of them are starting to heavily invest internally into renewables, they are setting themselves targets."

Even with newly established goals, these corporations will have exposure to fossil fuels for a "very, very long time," Funk said. "The question then is, for me as an investor, what do I do?"

Investors will continue pressing companies on social issues, in particular around COVID-19, worker safety and diversity

The pandemic disrupted nearly everything in 2020, and it brought a heightened focus on human capital management issues like employee safety. COVID-19 will be "a major theme of the coming year" in shareholder proposals, says Courteney Keatinge, a senior director of ESG research at Glass Lewis, which provides research and recommendations on how investor clients should vote on proposals from management and shareholders.

Glass Lewis has already seen a number of shareholder proposals submitted that deal directly with COVID. "In particular, we're seeing proposals be submitted to meat-packing, meat-processing kinds of companies, given some of the safety issues that happened as a result of COVID," Keatinge said. "We've seen a proposal at Walgreens Boots Alliance right now that's dealing with their sale of tobacco products and the link between smoking and COVID."

Keatinge also expects investors will pay greater attention to race and gender diversity, both in board composition and in company policies more broadly. Corporate disclosures around race have been generally "poor" in the past, and Keatinge said investors are looking for enhanced transparency.

"We're seeing a focus on appointing people of color to boards and top management positions. We're talking a lot more about pipelines and how you're ensuring women and people of color are included in the leadership pipelines and in kind of all different aspects of the company, and really in the economy," she said. "This kind of very broad focus on the issue and very intensified focus on this issue is going to play out in the coming year."

Amid investor demand, ESG disclosures and data will continue to develop

Trillium Asset Management is one investor seeking enhanced company disclosures around race. Patsky, the firm's CEO, says companies already collect data about the racial and gender breakdown of their workforce in the form of EEO-1 reports required by the Equal Employment Opportunity Commission.

"Some of the clearest data happens to sit within that EEO-1 document that is required for every employer of over 100 employees in the United States, and it is material information, and it does give us great insight," he said. "We've been pressing the [U.S. Securities and Exchange Commission] for years now to recognize the materiality of that information and have asked that they require it to be disclosed. Of course, at the same time, we've been pressing companies to release it voluntarily, and we've filed many shareholder resolutions asking for that."

One of the most influential standard-setting bodies in the ESG world is rethinking its approach to human capital management disclosures in the wake of COVID-19.

"We have heard back from the marketplace that ... they want to know more about human capital issues and what companies are doing there. And so we see this as an opportunity for potentially improving the standards that we have," said Jeff Hales, chair of the Standards Board at the Sustainability Accounting Standards Board. In 2020, SASB announced it was reassessing the scope and details in its standards for human capital management. While its standards are voluntary, SASB's framework is widely recognized and applied. The group is accepting comments on its initiative through Feb. 12.

"The types of things that we're thinking about are really kind moving from traditional health and safety issues ... and thinking more about some of the mental health issues around stress, depression and anxiety, the ability to provide workers with the benefits around paid sick leave," Hales said.