It was my privilege to host a panel talk on ‘ESG across asset classes’ in Luxembourg this week, at the Luxembourg Sustainability Forum 2019. After nearly a year of newsprint, it was nice to be talking finance in front of an audience once again!
Thankfully, in our conversation we managed to get out of the usual trap of simply talking about the definition of ESG – yes it is hard to define what counts as, say, a ‘green’ investment, as each investor may have different criteria. However, some asset classes lend themselves better to ESG investing (straight-up equities, ETFs especially, but also private equity) and some are extremely difficult if not impossible without relaxing standards significantly (which sovereign bonds would make the cut without weighing on returns?).
The consensus was that the time for talking was long over and action must be taken. We cannot wait around for the likes of the EU’s common taxonomy on ESG to develop, but rather must take the initiative with transparency. Asset managers must come up with their own classifications, for example, as long as the definitions behind them are crystal clear. After all, more and more investors are crying out for ethical investment products.
Images: Luxembourg for Finance