ESG interpretation varies and perhaps should be centred around sustainability, suggests Ali Wilson, Techspert: Investment, The Verve Group.
As one of the hottest and most discussed topics in financial services, and indeed, the wider finance industry, an awful lot has already been said on the subject of ESG. However, the more material that lands in my inbox from the financial press, industry publications, fund managers and managed portfolio services, the more I question whether the material being distributed is truly reflective of what ESG is actually all about. Of course, it’s not just me, and many others in the industry have highlighted their own concerns regarding ‘greenwashing’.
First of all, the imagery and marketing around ESG products largely concerns the environment and green energy. Flick through any MPS brochure, and you will likely find a medley of shades of green, leaves, windfarms and solar panels. There is rarely any mention of the social and corporate governance standards to which the constituent firms are held to, and arguably these are the two most important factors, at least for short to medium term returns and the potential impacts on client portfolios. Yet, you will likely find plenty of information on how many estimated tonnes of CO2 are emitted by constituent firms in a very blinkered and obviously marketing-driven sales strategy, as CO2 emissions and environmental damage dominate much of the non-financial press and provoke more of a reaction amongst the general public.
Read more in our Professional Paraplanner article here.