Editor’s Comment: Is ESG itself really just fake news?

So the real Larry Fink letter is now out and those who reported on the fake version are left with egg on our faces.

But are we?

Is it so unbelievable that the head of the world’s leading (i.e. largest) asset manager should be taking drastic action on climate change? Maybe some of the fake phrasing (“sin stocks”), in retrospect, is clearly dubious — but some BlackRock insiders have told me they might have been fooled by it.

Also lending it credence was the fact that ex-Aviva CEO Mark Wilson, of known green pedigree, sits on the BlackRock board.

But, with hindsight, the fake letter does not pass the smell test, and once again, apologies are due.

The bogus email passed through my spam filters, both mental and actual. But let us consider the context. The IPCC is saying we have 12 years to sort ourselves out and as I have written recently, we are on the ultimate burning platform.

Just yesterday no less a figure than Jeremy Grantham was featured in a long piece in Bloomberg warning that accelerating climate change has “consequences so dire that they’re almost impossible to imagine”.

So why shouldn’t Larry Fink come out all guns blazing?

But the fake letter has created such a stir that it puts the real thing in context.

Jerome Tagger, the former Chief Operating Officer of the Principles for Responsible Investment, on social media, has called for a gap analysis between the real and fake letters.

One asset owner has (half in jest perhaps) suggested bringing up the fake letter in meetings with BlackRock. Speaking at an event yesterday, Owen Thorne of Merseyside Pension fund imagined meeting BlackRock and saying, ‘Go on then tell me which bit of this sounds unreasonable!’.

All this has led me to reflect whether everything I’ve written on this topic about ESG integration, investor engagement etc. over the past 10 years or so at RI and at other publications before that just been a more subtle, insidious version of the fake Larry Fink letter.While that was clearly a fake, identifiable with hindsight, what about the “real” ESG space, if we can call it that?

Look for example at the ‘cut and paste’ stewardship declarations that Tom Powdrill has unearthed on his blog.

“Zombie fund managers make a fool of their clients and the investment consultants who advise them,” writes Preventable Surprises’ Raj Thamotheram on LinkedIn.

That is the reality and I wish it was fake.

Engagement is often hailed as the way forward. But, with notable exceptions, this is a black box devoid of meaningful disclosure, transparency and comparability. I know of one responsible investment body that is starting to harbor serious reservations about engagement as a concept.

Too much energy is wasted ‘squabbling amongst ourselves’ and not on generating real, positive, measurable outcomes. We are facing climate collapse, seas full of plastic and a degraded planet but is the investor response enough given the scale of the crisis? We all know the answer to that.

If the fake Fink letter and our misguided reporting on it can help focus minds on achieving greater goals and meeting the challenges we all face then it will have been worthwhile.

For what it’s worth, I don’t think ESG as a sector is swamped with ‘fake news’.

Yes, there is greenwash, ‘stewardship wash’ and ‘impact wash’ but also some great stuff going on, as we report every day and have done in good faith for over a decade. The Transition Pathway Initiative news today for example.

The final word goes to Jeremy Grantham. “Anything that happens to a corporation over 25 years out doesn’t exist for them. Therefore, grandchildren have no value.”

With reporting by Khalid Azizuddin.