Investor scepticism on ESG points to a maturing market
PA Consulting’s financial services expert, Jason Hill, comments on the concerns surrounding ESG greenwashing and how asset managers can demonstrate the benefits.
The article discusses how the backlash against sustainable finance has arrived, however while some worry that environmental, social and governance (ESG) is losing credibility, others believe a healthy dose of scepticism indicates that greater rigour is entering the market.
One concern is that unclear definitions of ESG, along with pressure to meet high demand, is resulting in investment products that are not as green as they claim to be.
The article goes on to say that mainstream investors’ embrace of ESG has prompted another worry: that too much emphasis is being placed on the financial returns, rather than on whether the funds are making any difference to global environmental problems.
Jason believes asset managers who can demonstrate this will benefit in the long run. “Step one is measuring carbon impact, but what we want is the year-on-year trends of the impact, which we’ve not seen yet,” he says. “This will give a huge competitive advantage to those that get that out there. At the moment, it’s ‘trust us’ – but soon it will be ‘look at us’.”