I’ve been struck in recent weeks and months by the proliferation of articles and ‘expert’ views among our fine peers in the press that go something like this:
“ESG is the talk of the financial town…giving all you do-gooders a warm, fuzzy feeling. But stop! Do you not realise your minds have been taken over by left-wing, non-financial ‘groupthink’ that has rendered rational thought impossible and plunged you into a mire of greenwashing. I, rational, sentient expert/journalist, am here to tell you why this ESG stuff is non-empirical, balderdash that real ‘markets’ men (let alone women….quite often the issue of sexual equality is done down as both a social and financial issue) wouldn’t go near. Ad nauseum……”
Many of these pieces trot out some tired old nags masquerading as argument, deploy financial legerdemain, or are sometimes just plain confusing; mashing up terminology and making little sense (granted, we have some housekeeping to do here!).
Some point out the problems, but then do nothing to suggest any solutions…..
Some, of course, make valid points, albeit couched in a haughtiness that would suggest, for example, that the $70 trillion of assets signed up to the PRI had no idea of what they were doing as some of the world’s largest investors. The reality, of course, is that most investors are quite aware of the pragmatic ‘journey’ that is responsible investment and ESG integration. Of course ESG is far from perfect: how could it be otherwise when it aims to get investors to take seriously some of the biggest sustainability challenges of our time (because they are both financially and societally critical) in a world where politicians and our institutions have become increasingly unable/unwilling to? Yes, the data is flawed. In the absence of regulation how could it not be? And yes, investors are doing less than they say, but more than people might think.
Anyway, I thought I’d tackle the issue head on in a seasonal style by kicking off my argumentative advent calendar based on the 12 days of Christmas: one mistletoe-ESG-misnomer buster per day.
I’ll try and get to 12…shouldn’t be difficult, he says….
BUT, if you have one, E-mail it to me and we’ll publish the best!Here’s my starter for 12
On the first day of Christmas my true love (or perhaps it was an FT journalist, I can’t recall) said to me a partridge in a pear tree (Actually what they said was: “Different ESG research houses produce different scores therefore we should ignore them.”)
Yes, I replied, this is true. However, I have heard it oft said that financial analysts also have vastly different views on the finances of companies and can simultaneously provide buy, hold or sell signals on the same company…and at the same time! My New Year’s resolution for 2019 will thus be to ignore all financial information and to write as many ‘snarky’ stories as possible on the foolishness of the financial analysis industry (although there may be something in this)…or what’s left of it after MIFID II.
Hohoho, Best wishes for the season from all at RI. Cheers, Hugh