Language reform needed for ESG to flourish
There is a real need to remove the language of “woke capitalism” from ESG investment, according to a panel, if there is to be progress in Australia.
Speaking at the Responsible Investment Association of Australasia (RIAA) investment conference, a panel discussed whether ESG was “woke or broke”.
Fiona Reynolds, an independent director, said: “Our economy should serve the needs of society, and if that’s ‘woke’, then so be it, but that’s something the industry really needs to reject.
“We need to not use that language that is deliberately being used by the enemies as really deceptive and political framing. We need to make sure we really push back against it and reject the notion of ‘woke capitalism’.
“We should always make sure when we are talking about these issues that we are framing it as a fiduciary responsibility; speak the language of investors and think about risks and opportunities and it’s role in long-term value creation.”
The panel discussed how this was becoming a big issue in the US, which focused more on individualism than the collective approach seen in Europe. This was particularly a problem for global companies headquartered in the US, which had to navigate meeting the needs of both sets of clients.
However, in Australia, Reynolds said the finance industry had welcomed the ESG nature of investments and that this was particularly reflected in the most recent budget from Treasurer Jim Chalmers. The interest of the government meant there was unlikely to be a backlash to ESG in the near term.
“[A backlash] won’t happen under this government, but it could happen. All of the financial services sector are on board regarding ESG and understand climate risk, so I’d say it is unlikely but not impossible.
“In less than a year, we’ve had more actions than in the last decade; there has been a deluge of things they are trying to deal with in terms of disclosure and greenwashing coming at them very quickly. We have a supportive government in terms of sustainable finance.”
She cautioned that while the government was supportive, it was important not to get caught up in politics.
“The investor issue is to not get caught up in politics and be careful about the language we use, [and] show that we are prepared to work with the government.”
Fellow panellist Professor Tim Lynch, professor of political science at the University of Melbourne, disagreed and felt that politics was a fundamental part of ESG.
“Don’t assume everyone will resonate in a political consensus; ESG is unavoidably political, and if you forget that, then you go nowhere.”
AUTHOR
Laura Dew
Recommended for you
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
Responsible investment performance concerns have lessened as the market hits $1.6 trillion in AUM, according to RIAA’s annual report, but greenwashing fears among asset managers are on the rise.
Research by Morningstar has found fixed income funds are bucking a general trend around managed fund fee dispersion with a smaller fee dispersion compared to equity ones.
As investors seek to diversify their portfolios, the naming of bond labels has broadened out to include green, social and impact bonds, according to the annual RIAA report.
Looks like a duck, quacks like a duck: WOKE CAPITALISM!! You guys have been trying to ram this crap down advisers throats for long enough. Most see it for what it is, a politically motivated "climate" initiative and all the rent seeking managers jump at the chance to get their snouts into the trough. Sickening.