For investors, this will force them to think about all aspects of ESG – not just the environment – and how their money can be invested in a way that helps to put all the building blocks in place, in the right order.
Another discussion that advisers will need to have with their clients, especially when considering global sustainable investments.
Challenges for governments:
For Ashley Hamilton Claxton, head of sustainability at Royal London Asset Management, it takes governments, industry and consumers collaborating together to turn the world sustainably.
But Dunbar takes a cautious – if practical – approach.
“Can you get elected as a politician if you are going to fund billions of pounds of renewable power infrastructure in emerging countries?” he asks.
That said, he believes governments are stepping up regulation to create greater transparency and accountability to investors, who have the ultimate say.
He calls this ‘outsourcing’ of responsibility to the industry.
He explains that regulation, disclosures and transparency means his company can make informed choices about where to invest, or where a potential organisation is on their ESG journey.
While there is still a lot of voluntary disclosure – and it is up to investment managers and advisers how much store to set by this – Dunbar feels that some level of monitoring and compulsion is needed. For this reason, education is also vital.
Dunbar adds: “We can [reach] young people who are passionate about the environment and social issues, but can you educate adults if they don’t care in the first place?”
This is why he believes ESG threats and implications have to become even more visible, and for the industry as a whole to make progress in helping people to understand the nature of the challenges before this can be translated into day-to-day decisions.
Wang adds: “Integrating ESG into the investment process isn’t so much a destination as a journey – one that gets better as more people undertake it.”
