Industry insider: Net zero success requires ‘paradigm shift’ in human consumption

The financial world will need to adopt sustainable consumption habits to achieve net zero, ESG-positive growth, according  to a major impact investor.

Per Ståhl, chief investment officer at German-headquartered JC Impact Investing, observed that growth worldwide will be inevitable, exhibited through trends such as a rapidly expanding middle class in Asia seeking out technology such as iPhones.

“I'm seeing a paradigm shift in the way early stage companies approach sustainability, which makes me feel very hopeful due to the extraordinary innovation going on right now. This has the potential to lay the foundation for continued growth cycle, but in a much more sustainable way.

He added: “I don't believe that we're going to decrease consumption. I don't think it's in our nature as human beings. Therefore we need to make the greatest paradigm shift in how we consume, and how we treat things”, he said.

Ståhl made the remarks at a webinar hosted by The Business Excellence Institute, on the topic of ‘Opportunity or fad? ESG in an age of culture politics’.

When standards go wrong

Also speaking at the event was Mark Coyne, global sustainability lead at Irish food and beverages corporation Kerry Group. 

Of the conversation around standards in ESG, Coyne related the controversy surrounding JBS Beef, and its ESG rating of A- by the CDP in March this year, despite ongoing concerns about its contribution to deforestation in the Brazilian rainforest.

“[The new rating] created an absolute storm because this is a company where they developed cattle farms in deforested areas. This could be a story of where a standard can go wrong.

“But on the other hand, this is all about transparency. If we didn't have a transparent world, we wouldn't be even having this discussion around JBS, as it wouldn't come to light.”

Of particular standards, Coyne pointed to the upcoming Corporate Sustainability Reporting Directive (CSRD) in Europe, and expressed his belief that the high standards of the regulation carries with it the potential for it to be a major tool in the fight against greenwashing.

Potential of ESG

During the discussion, Ståhl also compared the current stage of ESG as a concept to his four year old son, right now capable of causing destruction but also “carrying great potential.”

He further raised concerns about the dualities inherent to ESG, raising the much discussed case last year when electric car manufacturer Tesla was removed from the S&P 500 ESG index due to governance issues, while oil and gas giant Exxon Mobil remained.

With this case in mind, Ståhl said: “This is a clear indicator that ESG usually has nothing to do what the company produces, but rather how it operates. From that point of view, ESG is a good indicator, but it shouldn't be the selection criteria for any investment.”

There is also the issue of anti-ESG rhetoric escalating sharply in the last year, largely emanating from Republicans in the US and the atmosphere of “culture politics” addressed in the webinar.

Of the anti-ESG phenomenon, Shanais Hilliard, diversity officer at US legal services firm CSC, said: “I do not think that political pressures are going to derail the ESG agenda.

“Organisations that companies take their ESG obligations seriously tend to outperform financially. [the anti-ESG movement] will likely add delays and frustrations to the success of the agenda, but I don't believe that it will be fully taken off the track.”

This month, Net Zero Investor explored the anti-ESG wave, leading to the principles being described as everything from the ‘Devil incarnate’ (by Tesla chief executive Elon Musk) to outright Nazism.