The public also appears mostly on board, with approximately 70 per cent wanting their money to go towards making a positive difference to people, or the planet, according to recent surveys.
That ought to be seen as a broad consensus which, if nothing else, demonstrates the strength of feeling and scale of the challenge which ESG has evolved to meet.
Many still do not realise that the 2015 Paris Agreement marked a huge shift in 'Big Money', when it started to move away from the fossil fuel industry.
According to Michael Liebriech, founder of Bloomberg New Energy Finance, this was the point where Big Money served 'divorce papers' to coal, oil and gas, and Glasgow was when the 'court order' (or 'decree nisi') was handed over.
This, partly, is the reason why oil giants such as Royal Dutch Shell are moving more into natural gas, to try to reach net-zero emissions, putting the customer first.
Many in the financial planning community will know ESG investment has received criticism from some quarters.
BlackRock’s former sustainable investing chief investment officer, Tariq Fancy, argued that ESG was a ‘dangerous placebo’ and many different alleged ESG strategies have been accused of ‘greenwashing’.
This is an area which is likely to come up with clients: the weight of evidence and the environmental imperative versus the idea that this is simply a shiny new wrapper to sell investment products.
Range of options
For investors who are wondering how they can make their portfolio more environmentally friendly, there are a range of options to discuss with their adviser.
The most radical route is screening to exclude companies, industries and even countries from portfolios which do not meet their ESG values. This might work for some investors but is likely to be too restrictive for most.
Another possible option is to raise positive vetting to identify companies which are setting an example for their peers on ESG matters and reward them by investing in them.
This would allow a client to invest in companies working in areas such as fossil fuels, auto manufacturing and mining provided they are showing evidence of leading the way in their industry towards meeting ESG criteria.
It is worth pointing out to clients that they can also check workplace pension funds to see where the default fund is invested, which could be a further concern.
Clients do not necessarily need to adopt an ESG strategy for their entire portfolio all at once. Therefore, another option would be to pursue integration - this would mean gradually including more companies and funds which mitigate ESG risks.
