“Why did you just snort that suspiciously watery-looking coffee down your shirt?” asked the chairman of the insignificantly-sized investment company Kermitted Asset Management as we sat on a park bench sipping from separate flasks. “All I did was express my pride at the way ESG is so embedded in our organisation’s DNA.” “Please stop,” I snorted again. “I’m running out of ‘coffee’.”
“I must say, I’m a little surprised at you,” said the chairman haughtily. “ESG is no laughing matter.” “No, it isn’t,” I agreed. “But the way asset managers talk about it can be. And one of the funniest lines of the lot is this ESG-DNA cliché that has become so fashionable.” “Nonsense,” huffed the chairman. “Talking about ESG being in our DNA is in my DNA.
“Anyway, how is what I said so different from your little line about asset managers needing to have ESG considerations running through their investment process like words through a stick of rock?” “For one thing, old-school seaside postcard imagery is more endearingly self-effacing than shamelessly trying to imbue your investment approach with a whiff of science,” I replied.
“More importantly, though, my ‘stick of rock metaphor’ implicitly acknowledges there’s still work to be done to achieve the sustainabilification of an investment process. In contrast, your DNA line suggests you’re already there – and, worse, that you’ve always been there.” “You know,” sighed the chairman, raising his hand to his heart, “in a funny sort of way we …”
“Don’t you dare,” I cut him off. “Don’t you dare use my line about if fund managers aren’t investing in sustainable businesses, what on earth are they up to? That may work well enough at a general level but it doesn’t get you past the inconvenient truth of environmental, social and governance investing.” “Which is?” asked the chairman helpfully.
“That if it really has always been in your DNA to invest responsibly and for the good of the planet, communities and stakeholders – other than yourselves, naturally – then, with a few honourable exceptions, it would show up in your shareholder voting records earlier than mid-2018. Give or take a month.” “Oh, I think that’s a bit unfair,” the chairman protested.
“You’re overlooking the fact asset managers’ engagement with errant businesses can take many different forms and the results can manifest them in many, many different ways. Not all of it shows up in voting records.” “True,” I nodded. “But it would nice if some of it did – pre-2018, I mean. It somewhat undermines your argument that we have started seeing a lot more shareholder action of late.”
“Frankly, I think you could cut us a little more slack,” grumped the chairman. “We are the good guys, after all.” “Hang on a moment,” I said. “To be clear, you don’t get a free pass from media scrutiny just because you say you’re ‘doing ESG’ – at least you shouldn’t.” “Well, all I can say is it’s a good thing some of your peers don’t hold such a bizarre world view,” said the chairman.
“I mean, what about all the asset managers who aren’t talking about becoming more ESG-oriented?” “But that’s my point,” I laughed. “I might have some respect for a group that stood up and made an alternative case but the fact is, these days, you’re all talking about it. Sure, there’s the obligatory ‘to-do’ list of, one, appoint a head of responsible investing or similar …”
“Yes, yes,” interrupted the chairman. “Two, launch some ESG vehicles – or at least add a couple of appropriate words to an existing fund name; three, send out many, many, many press releases. We all know the drill – what’s your point?” “It’s that I just can’t shake the mental image of David Cameron hugging a husky,” I shrugged. “And that can’t be how this story ends.”
“Absolutely not,” the chairman agreed with surprising force. “That is why, here at Kermitted, we have been working so hard identifying key targets …” “I’m sensing there’s a reason you didn’t say ‘action points’,” I sighed. “… and all of them are far more appropriate animals for me to be pictured hugging,” the chairman ploughed on. “Really – where are the Attenborough Points in a dog?”
