“Impact” matters

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Here’s an excerpt from this note from Harald Walkate:

I think this may be the most bizarre ESG chart I’ve seen in a long, long time. I found it in the Moral Money newsletter and see that it was produced by HSBC.

The accompanying text is: “Why do fund managers bother drawing up an ESG strategy? Sector professionals canvassed by HSBC gave an interesting set of responses. Attracting capital and requests for proposals (in which funds pitch for business) was by far the biggest motivation, with peer pressure also playing a major role. Concerns about risk mitigation featured less prominently, and only 8% of respondents focused on the potential for the approach to drive higher returns.” That’s it.

So what’s wrong with it? Like so often with ESG, it’s not so much about *what’s said*, but about *what’s not said* … there’s no mention at all of IMPACT. You know, making a better world, contributing to solutions to societal problems, fixing climate change, reaching the SDGs, all that.

I think many of us who are drawn to the world of ESG would say that at least one of the drivers was to “make the world a better place”. Also, since the genesis of ESG, asset managers have been making big claims about impact and SDGs. And in recent years, academics and other commentators have been more explicit in distinguishing between ESG motivations: (1) values-alignment, (2) financial returns and (3) impact.