Actively making the world a better place through ESG investing
If you’ve watched The Terminator, you may recall that the robots that are crunching over the piles of human skulls are doing so in the year 2029.
While I sat on my sofa on Saturday night, with a slice of pizza in one hand and a glass of wine in the other, happily cocooned in the specific sense of nostalgia you get from re-watching a 1980s action film, the thought popped into my head: is this what the world will look like in 7 years’ time? (No. In all likelihood it is not.)
Actively making the world a better place – as opposed to a postapocalyptic wasteland – is a topic that occupies a lot of my clients’ time.
They tell me frequently that their customers care about the impact they have on the environment, that the millions they spend on technology to reduce emissions or conserve water is essential or their customers will take their business elsewhere.
They say that if they don’t make things better, they are failing both themselves and their customers. For what it’s worth, I usually believe that these efforts are genuine.
Responsibe investing
While my corporate clients are working towards building sustainable operating models, my asset management clients are funnelling funds to those companies to enable change, creating ESG teams who are researching options and problems and solutions, and embedding ESG culture in their own businesses as well as their clients’. Working, as I do, mostly with younger generations, I do not hear “it can’t be done”.
Contrast these, then, with the other story I hear frequently: That ESG is meaningless, it doesn’t work, it’s been tried before, same stuff different day.
The Harvard Business Review recently published an article (An Inconvenient Truth About ESG Investing, March 31 2022) that one can only assume was designed to wash away any sense of “new day” optimism you may have felt while drinking your morning coffee.
ESG is “the” topic. It’s on everybody’s lips to one degree or another. When I first heard the phrase a few years ago, I assumed it would become mainstream and it has, which is nice.
But new things follow a pattern. First there is enthusiasm, then there is the backlash. Wordle was a joy until it was too hard/too easy/too acquired by the New York Times. Sentiment around ESG appears to be following a similar path.
Robust challenge is vital. It is important to know that there are ESG funds that are underperforming both in terms of return and ESG credentials, as the HBR article points out.
It is important to know that money pouring into ESG funds doesn’t always have somewhere constructive to go. It is important to know that some businesses will spend that money on a job lot of green paint and call it a day.
It is also important to know that things begin imperfectly. It is important to be the catalyst that helps things along instead of the friction slowing them down. It is important, after proclaiming “this is rubbish” to ask “how can I make this better?”.
It is important to be aware that while things take time, according to the IPCC we have none left. That means working harder to do better, faster, rather than holding your hands up in defeat.
By 2029 we may have decided that ESG is not the be all and end all of responsible business or responsible investing, but for now, it is important.
Want to learn more about ESG Investing?
At MDA Training, we have a number of ESG training workshops and ESG asset management simulations. Our experiential approach offers a practical, interactive and engaging approach to this key area of asset management.
And our wide range of ESG training workshops and simulations offer a number of flexible training options for early careers and new and lateral new hires, as well as, training solutions for CPD.
Click here to explore our ESG training solutions. And get in touch if you would like a free, no obligation demo of our ESG Investing Asset Management Simulation.
About the author: Debbie Hearman is a Principal Training Consultant at MDA Training. She works extensively with our clients in Asset Management, Investment Banking, Corporate/Commercial Banking and Insurance.