Investors are right to be “a little careful” about getting caught up in the anti-ESG push in the US but “there is no anti-trust issue” surrounding investor collaboration, Nathan Fabian of the Principles for Responsible Investment (PRI) told Responsible Investor.
“There’s a cultural war going on around issues that are unrelated to investment,” said Fabian, the network’s chief sustainable systems officer. “But investors are being dragged into a broader political fight, in one big market – so I think it’s reasonable that investors are a little careful about how much they want to be at the centre of this. I think that’s a prudent view.”
He added that the PRI has “taken great care” to make sure investors understand that the role of net-zero alliances is information-sharing.
“It’s to exchange insights on how the market is working,” he said. “Investors ultimately make their own decisions about how they’re going to allocate and engage. So from our point of view, there is no anti-trust issue because they collaborate with purpose.”
Fabian also pointed to the fact that regulators in other markets around the world are encouraging collaboration on sustainability issues.
The comments on collaboration follow Fabian’s remarks last week on the Glasgow Financial Alliance for Net Zero (GFANZ).
Fabian told delegates of the Oxford Sustainable Finance Summit: “The idea that an [asset] manager… who serves millions of different individual clients can set its own 2050 target and faithfully implement that supposedly on someone else’s behalf was frankly never going to work.”
He said the solution was not to “throw away GFANZ”, but added that the initiative “will clearly have to have a careful repositioning and clarification of what members are meant to do”.
This week, he told RI that the PRI is fully committed to GFANZ and the various net-zero alliances. “From our perspective, collaboration is key. I will continue to support all these collaborative spaces, and we recognise that all the initiatives are on a learning curve.”
Regarding the need to clarify what members are meant to do, he said: “It’s really important that we actually start to look more at the work of the initiatives and alliances that sit below GFANZ. They are different groups of actors and they are working to get quite specific about what their roles are, what their potential contribution is and the flexibility needed around it.”
Specifically on the Net Zero Asset Manager Initiative, Fabian said managers need to balance the need for an ambitious transition plan with the needs of their clients. That means recognising there are “a range of pathways depending on how government policy comes in in practice”.
“This is how we start to get more clarity around what the financial community is doing on net zero, so that’s where we spend a lot of our time,” he added.
“Just because a manager says, ‘I understand the economic transition on climate, I’m going to use targets to try to guide my risk management, investment approach and service to clients, and then update you on progress as we go’ – which is essentially what net-zero alliances say – we shouldn’t assume that they’re making some kind of claim about being able to work independently of governments or of the way economies shift.”