ESG faces disruption in the wake of Russia’s invasion of Ukraine, with assets in ESG funds shrinking during the first quarter of 2022. Not only this, but fossil-fuel companies saw a recovery in their share prices, in part due to wider energy demand.
But some industry commentators – such as Martina McPherson, visiting fellow at Henley Business School – say this is likely a temporary interruption. The ESG paradigm has fundamentally shifted in the past five years, driven by regulation from the European Union and growing investor demand.
McPherson, who is also head of ESG product management financial information for the Swiss stock exchange group SIX, took part in an ESG panel discussion at Societe Generale Securities Services (SGSS) annual European Investor Summit recently in Paris.
Participants also discussed the challenge of establishing consistent criteria for identifying ‘green’ economic activities and investment projects since the EU Taxonomy is at risk of becoming outdated quickly as technology and solutions evolve.
George Latham, managing partner at WHEB Asset Management, said: “It is already over 1,000 pages long and it cannot define everything that is green because the industry is constantly changing and innovating.
“What is needed is greater transparency and clarity in language that people use, as well as better communication between investors and clients to allow for diversity of actions and processes.”
Funds Europe, in association with SGSS, reported on the European Investor Summit. Read more on digital currencies, private markets and ESG in our report here.
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