A poor year may end up being a positive for sustainable investing
ESG focused performance may have been unflattering and inflows reduced over 2022, but many positives could come out of this period for the future of sustainable investing.
Clear light is being shed on the differences in ESG implementation and asset managers keen to label funds as ESG, green, or impact, are being held more accountable for their claims. With authorities now willing to act, more transparency, clear distinction between products and better standards are likely to be the outcome. Ultimately this is all to the benefit of investors who will be able to have more confidence in the alignment of their assets with their sustainable objectives.
What is often forgotten, and is what those politicising sustainable investing in the US are perhaps missing, is that ESG investing is not just about improving the environmental credentials of investments, it’s about risk. While in years like 2022, there may be a quick buck to be made from oil and gas, analysis of the environmental, social and governance risk of the companies you invest in, may well just provide you with an improved long-term outcome.