UN PRI mounts defence of embattled ESG
Meeting in Barcelona for its first in-person conference in three years, the organisation stressed that ESG had moved from ‘niche to mainstream’.
Speakers at the high-profile in-person conference hosted by the UN’s Principles for Responsible Investment (PRI) have spoken in defence of environment, social and governance (ESG) principles in the face of increasing anti-ESG sentiment.
David Atkin, the CEO of PRI and chair of the opening plenary session of the conference, addressed the issue head on.
“It's healthy that approaches to the ESG integration attract analysis and scrutiny. However, in recent months, this scrutiny of ESG has intensified and the PRI is looking to support signatories by shifting the narrative to what ESG is and is not,” he said.
“We will continue to reiterate that responsible investment approaches are fundamental to investors’ fiduciary duty in generating returns and acting on sustainability outcomes.”
Atkin said progress had been made despite the energy crisis, rising inequality and a changing geopolitical climate. He pointed to the fact that the PRI has over 5,200 signatories and more than $121trn in assets under management.
“Governments around the world are beginning to articulate pathways to progress around the Paris Agreement. Investors are coalescing around their own net-zero targets and kicking off key collaborations on human rights. And the ISSB [International Sustainability Standards Board] is making inroads on creating a global baseline of sustainability exposures.”
ESG mandated assets are on the way to become more than half of the professionally managed assets around the world in 2024. So, I don’t think we can call ESG niche any more.
Niche no more
Atkin’s comments followed an introductory presentation by Victor Matarranz, senior executive vice president and head of wealth management and insurance at Banco Santander. Matarranz highlighted the importance of financial institutions, asset owners and asset managers in a world where global investment that degrades nature exceeds conservation efforts by between $600bn and $850bn each year.
“Sustainable investments are growing a lot. ESG mandated assets are on the way to become more than half of the professionally managed assets around the world in 2024. So, I don’t think we can call ESG niche any more. I think ESG investment has really become mainstream.”
Sharon Hendricks, a PRI board member and vice-chair of the board at Californian pension fund CalSTRS, spoke positively in the opening panel session about developments in the ESG space over the past three years.
“We can now all say responsible investing is just good investing. And I think responsible investors in the room, we've shown that we're better equipped for changes in the global economic landscape because we're mitigating some more risks, and we're capitalising on more opportunities,” she said.
However, Takeshi Kimura, a PRI board member and adviser to the board of Nippon Life, sounded a note of caution.
“The ’anti ESG’ movement should not simply be dismissed as a political issue between parties because it is a backlash against many different sorts of ESG investment approach, including divestment,” he said.
The ’anti ESG’ movement should not simply be dismissed as a political issue between parties because it is a backlash against many different sorts of ESG investment approach.
Finance as net-zero catalyst
Also speaking at the panel session were: António Guterres, UN secretary general of the UN (by video); Wilhelm Mohn, PRI board member and head of corporate governance at Norges Bank Investment Management; Renosi Mokate, PRI board member and chairperson of the Board of Trustees of the Government Employees Pension Fund; and Mark Carney, UN special envoy for climate action and Finance and co-chair of the Glasgow Financial Alliance for Net Zero (GFANZ).
Carney, addressing the conference by video, said: “Finance can do a lot, but it can’t drive net-zero transitions on its own. Finance is an enabler, it’s a catalyst, it can speed what governments, companies and entrepreneurs initiate.
“Based on our experience, GFANZ members are calling on governments to do more. It starts with being clearer about sectoral transition pathways, most importantly in the energy sector where the world must ramp up the ratio of clean energy to fossil fuel investments from one to one at present to four to one by the end of the decade.”
