Illegal dumping of waste, manipulating emission standards, use of child labour, and corruption are all instances of unfortunate incidents that we have experienced in the past years. For the companies and people involved, we also generally know what this leads to: fines, arrests, employees quitting their jobs either forcefully or out of protest, lower share prices or consumer and supplier boycotts leading to a decline in revenues and profits. Three letters - i.e. ‘ESG’ - capture these kinds of events and have increasingly gained importance, not only in corporate governance, but also among providers of capital. ESG stands for Environmental, Social and Governance. We highlight the significance of ESG in the lead article of the Europe Monitor.
In the Eurozone, economic growth has stabilised at a relatively low level slightly above one percent. A decline in economic growth in important export markets is affecting manufacturing through trade channels. Domestic demand remains comparatively solid against the background of low employment and inflation, benefitting real incomes and consumption. Nonetheless, current economic conditions are such that the euro area is more vulnerable for demand or supply shocks. In the Country Update we shed a light on the German economy.
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