In this year’s fun winter series for ESG Clarity, investment professionals in the sustainable investment industry answer questions on characters that would play them in panto, who needs to receive coal as a present, and ESG wishlists.
Here, Johnny Bowie, sustainability analyst at EQ Investors highlights a major climate victory, shares why he would love an impact metric tool and describes his introduction to ‘pieconomics’.
Winter festivities: Who would be the main character in your ESG pantomime?
My main character is Nemonte Nenquimo, a potentially unfamiliar name to most. Nenquimo is an activist and a member of the indigenous Waorani Nation from the Amazon Region of Ecuador and founder of two activist groups, Ceibo Alliance and Amazon Frontlines, that seek to defend indigenous people’s rights. Nenquimo has played an important role in preventing further oil extraction in the Amazon.
In August, Ecuadorian citizens were able to vote on a referendum deciding the future of oil extraction in the Amazon, specifically, the Yasuní rainforest, which is rich in biodiversity and home to many indigenous people. 59% of the voters voted in favour of stopping oil extraction. This was a major climate victory in which Nenquimo deserves significant recognition and would take on the role of Jack from Jack and the Beanstalk, taking on the oil giants.
Winter traditions: Which piece of ESG regulation or policy should be given coal this year?
I am sure a few are knocking about. Still, the piece of policy that I have put straight on the naughty list is the recent Partnership for Carbon Accounting Financials (PCAF) Global GHG Accounting and Reporting Standard for Capital Markets. The policy outlines how emissions related to banks’ capital market activities (facilitated emissions) should be accounted for in banks’ emissions disclosure. PCAF opted for banks to report their facilitated emissions using a 33% weight factor, meaning that only a third of emissions from banks’ capital market activities will be accounted for in climate-related disclosure.
Banks already account for 100% of capital market facilitation in their green targets, so it’s pretty unjust that they are taking 100% of the good and only 33% of the bad. It’s a shame not to see banks pushing to be as ambitious as possible, as they have a crucial role in driving the transition to a greener future; that’s why I’m giving this policy a massive bag of coal for Christmas.
Winter wonder: If you could have one ESG data tool that could do anything, what would it do?
I have an idea of an ESG/impact tool that would be very insightful. Along with the standard ESG data you can get on companies, I would love a tool that includes companies reported ‘impact‘ metrics. These metrics show how the companies’ products and services have impacted society and the environment over the most recent reporting year. It would be a great way to understand how impactful a company is and what types of impact are associated with it.
Winter wishlist: What’s on your new year ESG wishlist?
More stringent artificial intelligence (AI) ethics regulations would be high on my ESG Christmas wishlist. AI uptake is growing exponentially, but sometimes, when progress happens quickly, governance may fall by the wayside. While AI progress and development acceleration can bring excellent benefits, it can also bring many risks. Given that the decision on how to develop and deploy AI could have a detrimental effect on society, having the regulations in place to ensure that risks are adequately managed and don’t spiral out of control is necessary.
Winter gifts: Summarise a book all sustainable selectors should read in three sentences or less.
Book: Grow the Pie by Alex Edmans.
This book introduced me to the concept of ‘pieconomics’, which argues that a company’s pie, which represents the value it creates, can be grown so that all stakeholders in the business can benefit. The idea of the books is to show that companies driven by purpose are consistently more successful in the long term. It details why and what grows the pie and how to grow it, drawing on real-world examples and making the case for purpose-driven businesses.