The fund industry increasingly talks in terms of light green and dark green when discussing ESG. Specifically, a dark green fund has sustainable investment as its sole objective; a light green merely promotes environmental or social characteristics. But what if we applied this same distinction to investors, and indeed to people generally? Where would most people be on the shade-of-green spectrum? ROBIN POWELL says he’s somewhere in the middle, and reckons that most of us are now in that ballpark too.
In the tribal world we inhabit, we’re constantly encouraged to take sides. Brexit or Remain? Pro-science or anti-vaccine? Team Harry or Team Wills? Whatever the divide, people want to know which side you’re on.
Tribalism is a natural human tendency; we want a group we can bond with. But, it certainly has been on the increase, fuelled in part by social media. And one of the problems with it is that it fails to reflect opinions as they actually are. Few people are entirely one thing or the other; most of us are somewhere between each end of the spectrum.
ESG is just such a divide, and 2022 was the year it turned tribal. The inflection point, arguably, came in July, when Stuart Kirk resigned from his post as global head of responsible investing at HSBC, after making controversial remarks minimising the risks of climate change.
The story emboldened several financiers and right-wing politicians to criticise “woke capitalism”. Meanwhile, for the first time in a decade, figures from Refinitiv Lipper, showed that more money was withdrawn from ESG funds over the course of the year than was invested in them.
Enthusiasts for sustainable investing therefore began 2023 firmly on the back foot. And many are starting to question whether ESG really is the unstoppable force we’ve been led to believe it was going to be.
ROBIN POWELL is the editor of The Evidence-Based Investor. He works as a journalist and consultant specialising in finance and investing, and as a campaigner for a fairer, more transparent asset management industry. You can find him here on LinkedIn and Twitter.
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