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[+] German energy giant RWE in Neurath, western Germany. The 28th UN Climate Change Conference (COP 28) will take place in Dubai from November 30 to December 12. At the 2015 climate conference in Paris, the international community agreed on the 1.
5-degree target in order to avert a climate catastrophe. (Photo by INA FASSBENDER / AFP) (Photo by INA FASSBENDER/AFP via Getty Images) There once was a time when ESG, which stands for environmental, social and governance - was the buzzword of choice for many in the corporate world. But times are changing and now there are signs it may becoming tarnished, or at the very least less popular than it was five or 10 years ago.
A recent survey by EY highlights pronounced gap between what investors say and do when it comes to sustainability and ESG. Ben Taylor, partner for climate change and sustainability services at EY, said the survey shows two thirds of investors are saying they are less likely to focus on ESG in the future in an interview. In terms of a regional breakdown, 72% of investors in North America said they would be less likely to be focussed on ESG, while in Europe the figure was 67%.
While in the Middle East, the number was 64% and in Asia and Australia, 59% said there would be less likely. Taylor added this largely seems to come down to the dilemma many businesses face between short-term performance and long-term planning. He said one issue could also be “ESG fatigue” after a multitude of targets and announcements around 2019 and 2020.
New Gmail Security Warning For 2.5 Billion—Second Attack Wave Incoming FBI Warns Gmail, Outlook, Apple Mail Users—Check 3 Things To Stop Attacks Judge Refuses To Pause Beneficial Ownership Information (BOI) Report Injunction The survey also showed nearly nine in 10 investors (85%) say greenwashing is more of a problem than it was five years ago. And a similar figure (88%) said their firms have made more use of ESG information in the past year.
Taylor told me the survey also shows 93% of investors say they are confident that companies will meet their targets for sustainability and decarbonisation. “There is an almost universal belief that companies will hit these targets, but yet we are also seeing a moment where a lot of companies are re-baselining some of their ambitions,” said Taylor. Mike Wilkins, executive director of the Centre for Climate Finance and Investment at Imperial College Business School said sustainable investing is currently going through a challenging stage in its evolution in an email.
But Wilkins added sustainable investing will emerge “all the stronger for it”. He said investors have been hit by a barrage of new sustainability regulations, strong macroeconomic headwinds and geopolitical uncertainty, all of which have made the case for sustainable investment far from clear-cut. “Added to which the ironically unsustainable ESG-bubble which has emerged over the past five years has fuelled greenwashing fears and called into question sustainable investment strategies,” said Wilkins.
“Yet the case for the reallocation of capital to meet net zero targets over the longer term remains solid,” he added. “There is ample scientific evidence that backs the need of investment which is geared towards tackling the causes and impacts of climate change. ESG investing may have had its day, but sustainability is here to stay.
” Kimberly Knickle, research director of the ESG & sustainability practice at Verdantix said the recent U.S. presidential election results have created “multiple layers of uncertainty” in relation to ESG in an email.
“As the dust starts to settle, we must look beyond the broad-brush, eye-grabbing campaign claims and slogans, to the far more complex reality left for business operations in the short, medium and long term,” said Knickle. “It presents major challenges, with predicted upheaval and complex crossover of the environmental and sustainability regulatory environment .” Phoebe Stone, chief sustainability officer for LGT Wealth Management, said companies that are considered sustainable leaders, tend to be businesses with a growth profile, and not evenly distributed across all industry sectors in an email.
“We have not experienced clients wanting to move away from their sustainable investments simply because of these shorter-term divergences,” said Stone. “Our clients invest for the medium and long term, time periods over which these divergences are smoothed out.” Joe Long, a wealth advisor at international law firm Womble Bond Dickinson said there has been bit more scepticism towards ESG funds.
in the last 12 or 18 months in an email. “This might be due to their recent performance not matching the strong returns of 2020/21, or perhaps the FCA's focus on 'greenwashing' is starting to resonate with consumers,” said Long..
