ESG

Last year’s savage selloff hit ESG strategies hardest, but it hasn’t hit the appetite from big institutions. Their tastes have just become more discerning, with more stringent criteria for external manager selection.

The use of climate-related investment practices is seeing a sharp fall among the global institutional investor set, while more than half of them are worried about achieving the best returns while delivering emissions reductions targets.

Environmental, social and governance (ESG) funds should forget fiduciary duty, dump ratings and adopt extreme exclusions in a radical revamp of the investment overlay proposed in a US academic paper.

From little things big things grow, and the $75 billion industry fund hopes the impact investment commitments it and other funds have made will expand beyond their initial targets in the same way renewables did.

The growing scale of the carbon credit market – and the fact that the next stage of emissions abatement isn’t going to be as simple as the last – means that more institutional attention is warranted, according to Apostle. Just watch out for the volatility.

Global biodiversity loss represents a systemic risk for financial markets, and Australia – and its super funds – should be “global champions” for biodiversity efforts, according to Federated Hermes.

Institutional investment in natural capital assets continues to grow, buoyed by supportive regulation and corporate interest in the market, but good global data is still hard to come by.

The bias towards investing in domestic securities and the complexity of the local benchmarks mean the impact investing conversation is “very advanced” Down Under, according to global asset manager Ninety One.

The $14 billion industry fund is in hot water over allegations its member money is exposed to companies that should have been screened out and that it held on to Russian stocks despite saying it had dumped them.

ESG is the “emptiest” idea, according to Aswath Damodaran, while AI will morph into higher costs for companies overall with no competitive advantage in a world where the technology is ubiquitous.

Boutique fund manager Alphinity has struck a partnership with the CSIRO to develop a new framework to assess responsible artificial intelligence practices and ESG considerations.

The global energy system is changing at a rapid pace but it’s too early to pick winners, according to Calvert. And despite a tough 2022, true ESG will prevail.