If you had to come up with a
snappy title for your topic,
what would it be?
You could call it
Conscious Capitalism.
The so-called ESG, environmental
social governance space,
is exploding in scale.
It's currently reckoned to be
worth more than $31tn, $32tn,
which is dramatically higher
than it was a decade ago.
Increasingly, boards and
executives are realising they
cannot afford to ignore
what they used to call
"externalities," i.e.
issues like climate
change, social factors
like income inequality,
and a whole range
of governance questions.
Companies and big
investment groups
are saying, actually, what
we're interested in is making
sure we avoid harm to ourselves,
either reputational harm
or actual asset value
harm in the sense
that the value of our assets
in our portfolio falls say,
due to climate change.
Secondly, you got
a change underway
in the financial markets
where increasingly investors
are saying: we want
more than just profits.
And thirdly, policymakers around
the world from city governments
all the way up to national
governments and multilateral
organisations like the
United Nations are saying we
can't rely on taxpayers'
money, public sector finance,
to fund our
development projects.
We need to reach out to
the private sector, too.
Some companies can
see that's actually
good business opportunities
in the whole ESG
responsible business space.
There is such a wealth
of demand from investors
for green products that actually
demand outstrips supply.
That may not last, but right now
it shows that companies are not
being penalised for being green.
Typically, whenever you
see innovation in finance
you get a flurry of innovation
at a grassroots and lots
of little experiments all
over the place that pop up
in a very fragmented way.
But then, over time, the
industry grows up and you begin
to get more clear cut structures
for framing this new asset
class, labelling
it, auditing it,
and actually imposing more
transparency and consistency.
Inevitably, some
people might say
the whole thing is full of
green-washing and hypocrisy
and it's ridiculous.
However, no one shouldn't lose
sight of the fundamental point
that some investors are
seeking to use their money
to try and do good and to think
about the consequences of where
their money is going.
And that is a very
good thing indeed.
