In the future, Sustainable Investing will be the norm, there will be no alternative... however, the journey to get there is proving turbulent!
“At its core, ESG is a quest for something increasingly crucial in the battle to improve capitalism and to mitigate climate change: making firms and their owners accountable for their negative externalities, or the impact of production or consumption of their products on third parties, such as the atmosphere”
Source:
Economist July 2022
But what's the alternative?
The ESG rating industry needs to learn, progress, develop and collaborate –
which is hard to do with your competitors.
A study of six of the significant ESG rating agencies discovered there were:
- Over 700 indicators.
- Across 64 categories.
- AND,
only 10 of these categories were common to all 6 agencies.
Like a Woolworths pick & mix to suit your corporate objectives.
Notwithstanding the above, my opinion is ESG does play an important role.
Championing ESG
In 2006, I watched the documentary “An Inconvenient Truth” by Al Gore, intended to educate people about global warming.
I feel embarrassed today, as at the time I did not believe the documentary because it was…well...inconceivable that this could happen to our world.
There is now a general acceptance that unless we reverse the carbon producing impact of the past 50 years humankind is in trouble.
Socially, when it comes to race, gender, ability and pay, the corporate world is still an unjust place. The corporate world proves again and again that it cannot be trusted to hold itself to account – something we’ve all seen with
Mr Bates v The Post Office and the surrounding public furor.
All of this is why, for the foreseeable future, myself and ABSTRACT will remain champions of ESG, despite its shortcomings. Although progress clearly needs to continue to be made by the ratings industry I encourage you, reader, to be an active ally.
Here are three actions you can take today within the corporate world:
1 – Be curious.
2 – Share knowledge.
3 – Understand your own companies' ESG status.