Anti-ESG movement could spread beyond the US, PRI board member warns

Speaking at PRI in Person at Barcelona, Nippon Life's Kimura warned against a 'one size fits all' approach to decarbonisation.

A “one size fits all approach” to decarbonisation could give rise to anti-ESG movements outside the US, a board member at the Principles for Responsible Investment (PRI) has warned.

Speaking on the opening panel of the PRI in Person conference in Barcelona, Takeshi Kimura, special adviser to the board of Nippon Life, said the anti-ESG movement should “not simply be dismissed as a political issue between parties”.

He was responding to comments by Sharon Hendricks, vice chair of Californian pension giant CalSTRS, who described much of the anti-ESG backlash as “noise and politics”.

She said that ESG has become a “political football” in the US. “We’re seeing a lot of things being thrown around. We’re witnessing different demands and expectations from our stakeholders on all sides.”

While acknowledging that this can be “difficult to navigate” for investors, Hendricks said CalSTRS’ core beliefs and policies “allow us to remain disciplined and always focus on the best interest of our beneficiaries”.

She added: “In our boardroom, we have teachers sitting in the back and they’re watching us while we’re making decisions. That’s always a good reminder for me about how important it is to be consistent, thoughtful and measured about decisions I make on the board and keep some of the noise that we’re experiencing in the US at bay.”

Nippon Life’s Kimura, however, warned against viewing the anti-ESG movement as a purely political issue. He said it “remains a concern”, noting that it has been in part a backlash against certain modes of ESG investment, including a “divestment first and only approach”.

With energy and industry mixes differing across regions, he said such an approach would make a Just Transition in some regions – including emerging markets – difficult and in turn damage momentum for net zero.

“There is not a one size fits all approach that can be applied across all regions,” he said. “We need to take into account regional specificities… Exclusively focusing on a ‘one size fits all’ investment approach risks triggering anti-ESG movements even outside the US.”