Fiona Reynolds, Dugald Higgins and Cassandra Crowe

The industry needs to step away from finding a single vision for ESG and should instead embrace the different philosophies that match their ambition on the issue according to a panel.

Speaking at the Professional Planner Researcher Forum, Zenith head of responsible investment and real assets Dugald Higgins said the industry has made itself too busy arguing about who has the right vision.

“All this wrangling about someone’s version of sustainability versus somebody else’s is really impeding the whole process,” Higgins said in a session chaired by T. Rowe Price ANZ head of consultants Cassandra Crowe.

“If people are transparent and clear about how they view it and how they incorporate it, then that is the easiest way to stop getting into an argument.

“If people don’t agree with your interpretation that’s fine, they’re perfectly entitled to do that, but where there’s unwillingness to understand how the other person is doing it is where you get stuck.”

Kenneth Robertson, Robeco sustainable investing client portfolio manager, added that it’s instead more valuable to find a manager who has a matching definition of sustainability.

“You need those minimums standards that help make those decisions and help you avoid doing significant harm,” Robertson said.

Higgins added: “To bookend that you need to understand what success looks like”.

Greenwashing

Research from Investment Trends found responsible investing practices doubled in importance for financial advisers in 2021.

As more flows come into ESG the more pressure is on funds to deliver ESG results without compromising performance, which can often lead to cutting corners in implementing adequate screening filters.

Steve Monnier and Deanne Baker

Deanne Baker, Lonsec Investment Solutions senior portfolio manager for sustainability, said greenwashing gets talked about a lot for companies, but certainly applies to fund managers.

“We have a lot of slick marketing departments in a lot of fund managers out there,” Baker said. “Given the money is flowing into this space, there is a lot of scope for that kind of behaviour.”

Baker said smart advisers should look for fund managers that are genuinely advocating for change and committed to making a tangible difference with ESG.