Each time I visit Berlin, I get a strong sense of optimism and renewal. So it’s only appropriate that the launch of the European Responsible Investment Network (ERIN) took place in this city which has undergone so much change. Like the renewed Berlin, the responsible investment field is trying to emerge from its historical identity, redefine its purpose and reimagine the way in which capital markets can serve society.
The event’s topics ranged from the challenges of engaging investors on environmental, social and governance (ESG) issues, the steps investors have actually taken to better incorporate these non-financial considerations, through to the ways in which campaigners can be more effective in influencing policy makers and fund managers. Instead of giving a linear impression of “what went on” at the conference, I’ll focus instead on the key themes that I took away from it. These themes included the function of finance, the challenges of overcoming short-termism, the intersectional nature of individual ESG factors, in addition to how campaigners can more effectively promote change.
There was a general recognition of gaps between the finance industry’s understanding of its responsibilities compared to the issues of most concern to NGOs and CSOs. These gaps can be overcome, but it will require empathy, finding common ground and persistence from all parties involved. All this effort will be for a worthy prize: a financial system which nourishes a sustainable real economy, with the needs of society at its heart.
Continue reading “Renewable investing: The launch of the European Responsible Investment Network”
Climate change is currently the most pressing issue uniting socially responsible investors globally. Responses by different investors have varied from outright divestment of fossil fuel producers, engagement through shareholder resolutions seeking further disclosure, to measuring the direct carbon exposure of investment portfolios.
Each of the approaches used by large institutional investors has advantages and disadvantages in trying to effect corporate change. This blog post attempts to summarise these issues, weighing the arguments and counterarguments from a range of sources. Ultimately, the most appropriate course of action will differ on a case-by case basis.
However, the present debate on divestment has largely ignored individual investors. The existing investment architecture needs a rethink to enable individuals to have a stronger say in how their investments are managed when it comes to environmental, social and governance (ESG) issues.
Innovation is possible and necessary, and I suggest three approaches to aid engagement by individual investors, namely: a “building blocks” approach, look-through proxy voting and standardised ESG exposure metrics. Responsible investing is simultaneously personal and universal. The investment industry has an important role to play in evolving its infrastructure to let the voices of all investors be heard.
Continue reading “Divestment dilemma: Resolution, revolution or evolution?”
In Part 1 of this blog post, the focus was on the use of dialogue between investors and corporates to engage on environmental, social and governance (ESG) issues. A framework for this engagement proposed by Fabrizio Ferraro (IESE) and Daniel Beunza (LSE) was discussed, in addition to the way in which it might possibly be extended to other actors in the investment community, including fund managers.
How can this framework be harnessed and utilised by non-investors? Part 2 of this blog post takes a closer look at aligning the actions of investors and non-investor activists in interacting with corporates. Further, the use of dialogue by groups such as ShareAction, Fairtrade and Oxfam as part of ESG engagement is analysed. Ultimately, further collaboration between end investors, fund managers, civil society organisations (CSOs) and individuals will enable greater awareness and integration of ESG considerations by investors and corporates.
Continue reading “Talk isn’t cheap: Engaging corporates on ESG issues (Part 2)”