“Do we have to talk about sustainable, responsible and/or environmental, social and governance-oriented stuff today?” sighed the chairman of the insignificantly-sized investment company Kermitted Asset Management when we caught up last week. “I don’t think we have a choice,” I replied. “You launched an asset management business to focus solely on that one area and now we’re kind of stuck with it.
“Every other venture you’ve run could invest in any old nonsense, which meant you and I could discuss … well, you take my point.” “Quite,” nodded the chairman. “But it’s all so … depressing. Performance is tough. Selling is tough. Marketing would be tough – if only there was any. And that’s for the people who actually know what they’re doing. What about the rest?”
“How thoughtful of you to worry about others,” I smiled – though the chairman failed to notice my joke. “It just isn’t fun anymore,” he sighed instead. “I’m not sure ESG-type investing was ever meant to be fun,” I said. “Aside, that is, from the ultimate realisation of a better world – or indeed any world – to live in.” “Nonsense,” snorted the chairman.
“You alluded to the various businesses I’ve run in my time and I tell you this – with the possible exception of the remarkably popular, albeit remarkably short-lived, ‘Tech’ stable we launched in the summer of 1999 …” “Ah yes,” I interrupted. “With your ground-breaking risk-rated portfolios, ‘Tech A Chance’, ‘Tech For A Ride’, ‘Tech It Or Leave It’, ‘Tech The Money And Run’ and ‘Tech The …’”
“Yes, yes – I remember all the jokes,” the chairman interrupted in return. “But, as I was saying, with the possible exception of that splendid, if admittedly eleventh-hour, launch, I’ve never found asset-gathering as effortless as I did over the course of 2020 and 2021 – and, in my world, believe me, that is the very definition of ‘fun’.
“Over the last 12 months or so, however, asset-gathering in the green and pleasant land of ESG has been like running in off-green and unpleasant treacle. And yes, before you say anything, I know there are perfectly sound reasons why this should be so – just as I know there are perfectly unsound reasons too. And I would say they’re unsound because they are the very reasons ESG investing in its various forms has foundered before.”
“Failure to follow through on noble ideas with actual deeds,” I began, counting off on my fingers. “Failure to align national regulations across borders. Failure to come up with any common vocabulary. Failure even to agree on a name everyone can rally behind.” “Well, that’ll do to be going along with,” the chairman agreed glumly.
“Actually, I’m not sure I agree with you,” I said after a short silence. “Sure, those perennial fault-lines running through whatever-you-want-to-call-it investing aren’t exactly helpful but I would argue there’s now a far more solid basis for a proper run at the full cycle of investor emotions than was ever possible with ethical, pre-tech bubble bursting, or SRI, pre-financial crisis.”
“I’m not following you,” said the chairman – not unreasonably. “You know – all the emotions that sound like distant cousins of Snow White’s diminutive flatmates,” I persisted. “As I may have observed some years back, there are 12 of them – Optimistic, Excited, Thrilled, Euphoric, Anxious, Fearful, Desperate, Panicky, Despondent, Depressed, Hopeful and Relieved.”
“Oh – I remember,” said the chairman. “I think it was back in 2015 and you made the joke their two brothers, Denial and Capitulation, had left home – partly because their house was so crowded but mainly they felt left out as their names weren’t adjectives.” “Still works,” I said defensively. “Anyway, my point is, ESG is now mature enough to have ticked through a fair number of that dozen.
“So, whether your current mood is Anxious, Fearful or whatever, it’s not a massive jump to Hopeful O’clock – and then all bets are back on.” “Are you saying what I think you’re saying?” asked the chairman, perking up. “Experience would suggest not,” I replied. “What do you think I’m saying?” “That it’s time to launch a Green Value fund, of course,” he exclaimed. “Sure,” I shrugged. “I mean, it can’t be any worse timing than that Tech fiasco.”
