Roger Lewis, head of responsible investment, Downing
Turning 20 is usually an exciting time. No longer a teenager, early years at university and full of optimism for the future. In 2024, ESG – three distinct disciplines spliced together to form shorthand for investing sustainably and having seen a boom in recent years – is also turning 20.
It was back in 2004 that UN Secretary General, Kofi Annan, coined environmental, social and governance (ESG) as a way for companies and investors to “care, and to win”. However, instead of excitement, ESG is facing an uncertain future. For hype that hasn’t achieved anything, look at the endless upward march of parts per million of carbon in the atmosphere. For claims that “return always comes first” for fiduciaries, look at the political backlash towards the term in the US.
Core sustainability concepts, however, are facing brighter prospects and more integration in investment, corporate and geopolitical activities. One of those concepts, natural capital, combines responses to climate change and nature. While COP28 did not, indeed could not, achieve binding emissions targets, it showed progress. Nature enjoyed measurement, assessments and disclosures for the first meaningful time in 2023. Regulation is bringing structure and rigour. This includes labelling products to help consumers, combatting misleading claims about sustainability and providing supervision where needed (read ESG data providers). And surrounding all this is stewardship with dialogue about sustainability risk and opportunity.
So, less criticism of my name and better awareness of how I contribute to a sustainable future after 2050? If I were turning 20, that would be my wish.