ESG Celebration-The Most Successful Failure in History!
According to the UN Principles for Responsible Investing, there are over 5000 signatories, who signed the PRI (Principles for Responsible Investing) with an estimated AUM of US$130 trillion committing to ESG principles. Started in 2005, at the invitation of United Nations Secretary-General Kofi Annan, who invited a group of the world’s largest institutional investors to join a process to develop the Principles for Responsible Investment. This led to Principles for Responsible Investing. These are the principles:
Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
Principle 6: We will each report on our activities and progress towards implementing the Principles.
On any scale, one would consider this a massive achievement in realigning investment to restore the social and environmental balance, as well as achieve a financial return, with good governance. However, if we look at the outcome, not the money flows based upon a vague definition of ESG, one can only conclude that this has been a monumental failure. Few, if any of the environmental or social challenges facing the world, which the PRI was intended to address have been met. We have seen lots of fees for service providers and asset managers, but society and the earth has suffered deeply.
Responsible Investment is not working!
Social and Environmental Challenges not addressed.
Climate Change Destruction
Biodiversity loss
Water Shortage
Food shortage
Health Crisis (Diabetes)
Income Inequality (Living Wage)
Pollution
Threat of War
Many have benefited financially and all seem happy to enjoy the party on the sinking titanic, earning their fees, and accolades, toasting to selfies, press releases, and other photo ops. There are few serious conversations or questioning of present ESG 1.0 have been held. In the eyes of many, ESG, as it is done now, has become a “death march in the wrong direction but slower“. That is the progress part.
Next week. PRI will be hosting the PRI in Person Summit, in Barcelona on Nov. 30th, with over 2000 attending, including asset owners, asset managers, and service providers. If we look at the program, there is little serious open discussion questioning the status quo. Nearly no serious independent thinker who is questioning ESG methodology has been invited to speak. It has become a love-in for all those eating from the pig trough of fees, and benefiting financially from the present status quo.
Where are the true critical independent thinkers like Mark Campanale, Prof. Paul Watchman, Desire Fixler, Glenn Frommer, Bonnie Lorraine Smith, Angelica Lips da Cruz, Mats Andersson, Geoff Kendall, Leesa Soulodre, Paul Clements-Hunt Dr Raj Thamotheram, Wouter van Dieren, Kate Raworth, Alexandra Mihailescu Cichon, Alexandra Pittman, Alexandra Smith, Andrew Behar, Andrew Gazal, Andrey Bogdanov, Anne-Marie Brook,Antoine Mach, Arthur Wood, Bertrand Gacon, Bob Willard, Brett Wallington, Daniel Klier, Gabe Rissman, Gabriel Thoumi, Gabriela Gaby Herculano, Jennifer Rae Pierce, Kai Chen, Kevin Franklin, Linda Nemec, Luke Wilcox, Mark Tulay, Martin G. Viehoever, Matt Moscardi, Meeta Misra, Michael Bogosyan, Ned Harvey, Paul Allard, Paul Herman, Pavan Sukhdev, Peppi-Emilia Airike, Philip Sugai, Ralph Thurm, Reid Thomas, Richard Rothenberg, Sonia Zugel,Stefania Di Bartolomeo, Tee Ganbold, Tim Nicolle
How can you ever fix a totally bankrupt and broken system with only those that are supporting, financing and benefiting from this environmental and social destruction on stage. We need critical dialogue, not a cheerleading section saying who great we are when we aren’t
As I said, financially ESG with the PRI at the forefront has been successful beyond our wildest dreams, but some of us actually want the earth and society to improve and the balance restored so we can thrive. We need a financial system that works for all stake holders and not just investors.
“I’m worried about greenwashing. I think we should come down on it very, very hard, whether it’s with criminal intent or actively deceptive.” John Elkington