F— Tha Environmental Police?

[Haamsaaveni (Hamsi) Kumar]

Blackrock’s chief executive Larry Fink has stated that asset managers should not be responsible for ensuring that their portfolio companies are protecting the planet, a shift from his previous aggressive take on the importance of ESG.

Is this the signal that ESG will no longer be our favourite buzzword or is it simply one man’s opinion in the face of the growing need for companies to take more responsibility for their actions as well as the fact that ESG allows active managers to compete against passive trackers?

Let us know what you think!

[Andrew Spencer]

Interesting question!

I think that ESG will remain a buzzword until the regulations tighten and companies are forced to take more responsibility.

Greenwashing remains a risk because of the demand for funds with ‘ESG’ in their name and marketing materials. A genuine substantive policing of ESG claims seems possible but difficult. If, for example, the SEC imposed restrictions on funds labelled ‘ESG’ then it would be a significant extension of its current role.

However, given the SEC recently charged BNY Mellon Investment Adviser Inc. for misstatements and omissions about ESG considerations in making investment decisions for funds, we could see a wave of ESG enforcement actions and increased responsibility for funds. This could reduce Greenwashing and drive improved ESG regulation.

[Author]

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