It seems hardly a week goes by without a handful of articles telling us our clients are clamouring for environmental, social and governance-based investments, whatever that truly means.
Well I do not know about you, but that certainly is not true for me. In fact, in 29 years as an adviser, meeting hundreds, if not thousands, of clients I have had precisely four – just four – ask about ESG investing.
Of those, one is an ecologist and two are directors of environmental companies, and all four were only interested in environmental factors. I have yet to have anyone interested in ethical or social governance factors.
Now, I confess I do not ask my clients if they would like to consider ESG factors in their investments, because I have yet to find a way that will not produce a huge bias in their responses.
I have looked at a number of the questionnaires that purport to do this but I have yet to see one that avoids it either.
I think it almost impossible to broach this subject without bringing bias into it. How many people, if you ask them whether they like to consider environmental issues with their investment portfolio, are really going to say, 'No, I care not one jot about the planet and the future my children or grandchildren will face'?
They will of course say, 'Yes, I would love to,' because they think it is the right thing to say, even if they actually do not really care very much. How many will say they are concerned but then discuss how they will spend their retirement travelling and flying to exotic locations?
That is part of the problem with articles that invariably quote some research that supports the public crying out for ESG investments. Problem is, I have yet to see one that was not sponsored and paid for by an asset manager with a shiny new ESG fund range to promote.
There is a famous Yes, Prime Minister piece where Sir Humphrey shows Bernard how easy it is to get the public to say what you want them to say on a survey.
ESG surveys are a classic case for this; no ESG fund manager is going to want a survey that says, actually the public do not really care, and if they did get a survey that said that, you can bet it would not see the light of day.
I also think there is little evidence that how we invest actually makes much difference to a company's behaviour, but I am running out of words to discuss that fully. Maybe another column another month.
In short, it seems to me it is not clients that really want ESG investments; it is fund managers.