Thursday 31st August 2023
Why I'm committed to ESG, despite the momentum shift
As advisers we tend to forget the incredible position in which we sit, as the stewards of client capital, with the power to determine what types of companies deserve or warrant additional investment. Our advocacy effectively provides capital to these companies to continue to grow and evolve.
News that behemoth index manager Vanguard had been hit with greenwashing claims by ASIC once again piqued my interest in the shift of sentiment away from ESG strategies. If one of the largest fund managers in the world seemingly couldn’t get it right, then what chance do us financial advisers have?
But to be honest, the news simply reiterated my own commitment to continuing along this responsible investment journey, as many are now labelling it. From a privileged position supporting the construction of agendas and content for The Inside Network’s ESG Retreat in Tasmania, I get to see every side of the discussion.
Some years ago, well-known professor Aswath Damodaran published an article suggesting greenwashing would remain a key part of the ESG story, and is simply part and parcel for what is such a challenging topic. He couldn’t have been more right.
What is clear, however, from undertaking dozens of content calls in preparing for our ESG Retreat, is that the world around us is changing, and there is a growing awareness of the impacts we have or will continue to have in the future, both environmentally and socially.
As advisers we tend to forget the incredible position in which we sit, as the stewards of client capital, with the power to determine what types of companies deserve or warrant additional investment. Our advocacy effectively provides capital to these compaies to continue to grow and evolve.
The consumer sentiment is obvious, as highlighted by annual reports from the likes of the Responsible Investment Institute of Australasia (RIAA), Investment Trends or Core Data. Each of these confirm the growing demand for advisers to consider responsible or ethical investing by the growing cohort of clients.
Among the greatest challenges, however, is the fact that most consumers still don’t know exactly what this means. That is, they may have a few personal preferences, but they have never given consideration to the deeper issues related to more responsible and ethical investment selection.
The burden is therefore placed on the adviser to ask more questions and guide clients through what can be a confusing and complex journey. In many cases, advisers themselves aren’t fully equipped to support this.
This is an issue that is made more complicated by the explosion in ESG and responsible investment strategies, and the wide range of approaches used by fund managers the world over.
While the embrace of ESG by the masses is very much a positive, there remains a significant cohort of those ‘saying one thing and doing another’. This is one the many issues I’m excited to be raising at the ESG Retreat this year.
Drew is editor of The Inside Network's publications and a principal adviser at Wattle Partners.
