Are we all ESG investors now?


People would rather go to the dentist than invest in something that goes against their principles and actively harms the environment.

This was the finding of a survey from Kleinwort Hambros, and one of the points discussed during the FTAdviser Editor's Podcast.

As the United Nation's sustainable development goals reach their fifth year, and more news and information on environmental, social and governance investing is readily available, companies are starting to push ESG up their corporate agenda.

But does this mean that all companies are truly ESG-minded now? Are we all ESG investors by default?

Angus Parker, head of developed equities and global equity climate change fund manager for HSBC Global Asset Management, said with all the news readily available it was clear more people are demanding ways to align their finances with their values.

However, he said there could be a lot of "misinformation" out there, and investors needed to look behind the headlines and see where companies are really driving positive change. 

He said: "The key thing is that we are not speculators: we are investors.

"These companies do not exist in a vacuum so our focus on ESG is short form for thinking about how companies relate to each other and to stakeholders and the environment and the regulators. 

"ESG is a short-form but investing has always considered the different stakeholders."

He said it was also important that, as an active manager, HSBC and others should put pressure on companies to implement proper and lasting positive change.

But how can investors properly interrogate the ESG credentials, and how can advisers properly advise a client based on what can sometimes be some rather qualitative, rather than quantitative, understanding of where people really want their money invested?

Delyth Richards, client solutions group chief operating officer and head of product strategy for Kleinwort Hambros, said while clients are proactively asking for investments along ESG lines, there is no such thing as the "average client".

Therefore while some demand their money be invested in a certain way, others will want something completely different. So part of the advice process is education but also dispelling some old and persistent myths, but she echoed Mr Parker's view that there was a lot of confusion.

Ms Richards said: "It is so challenging for them. There is a growing group of acronyms out there and even if you look at benchmarks, such as the MSCI Leaders, there is a certain proportion of the output of those companies that might not necessarily fit the criteria that maybe some people would aspire to."

She added while the E might be in focus, and maybe the G, the S "is taking more time to gain the traction that it should have done".