ESG Investing  

Campaign launched to nurture interest in ESG investing

The London Institute for Banking & Finance is backing the green finance education charter that has recently been launched for professionals in the finance industry.

John Somerville, head of regulatory relationships at LIBF, also believes in the role of business and says: “Every company should be thinking about the impact their business is having... That means thinking about every part of the sustainability puzzle, including diversity and inclusion, health and wellbeing and how to minimise pollution and waste.”

Will of the public

Helen Dean of Nest supports Mr Carney and Mr Somerville’s view of the part played by business, but adds the reminder that the foundation stone of good ethical business is public will.

The chief executive of Nest Corporation – a not-for-profit pensions trust whose members make up a quarter of the UK’s employee population – Ms Dean says membership surveys demonstrate there is a strong desire for funds selected to conform to ESG principles.

She says: “Member surveys call on Nest to sort out society, the economy and the environment because they are some of the factors that have caused the problem of Covid-19 and made it so hard to deal with.”

Questions concerning any “trade-off” between returns and investing in line with values is a “myth”, a “false choice”, she says. 

“Nest is a long-term investor that is investing in companies that are going to survive, thrive and be sustainable in the long term in order to achieve returns for our members. This is part of managing risk,” she adds.

Russell Picot, chairman of the trustee board of HSBC Bank (UK) Pension Fund, feels the same way.

He says the system was “previously optimised for efficiency and not resilience”, which he notes opened investments to a huge amount of risk. This is reflected by Mr Carney, who quotes BlackRock’s chief executive, Larry Fink, saying: “Climate risk is investment risk.”

But advisers can help with understanding ESG and communicating the importance of investing. Pensions specialist Henry Tapper talks about the role of IFAs in individual stewardship. Mr Tapper says IFAs are important to the fund manager or platform manager. Therefore, if the IFA can “bring their influence to bear on a situation then an IFA can become a proxy for quite a few of their clients.”

Likewise, IFAs are able to “vote with their feet” and move their clients’ money to another fund. “At the stewardship level, at the product level, and at the fund investment level, IFAs have a great story to tell”, says Mr Tapper. “But most importantly too, IFAs have a capacity to communicate to their clients that their clients can make a difference.”