ARE YOU THINKING BIG WHEN IT COMES TO ESG?
We’re unashamedly supportive of purpose-driven investment here at Social.
So much so that we launched a whole new division dedicated to working across responsible investment, impact investing and environmental, social and governance (ESG) in place making, housing and the built environment.
Providing some big picture context to all this is the WWF film below, Our Planet: Too Big to Fail, launched in September 2020 and being rolled out at major financial institutions in the City of London.
This film is about thinking big, and thinking brave. It’s about changing the financial and economic system to create a sustainable future. It’s about building a sustainable finance sector and a healthy planet.
From Sir David Attenborough and Greta Thunberg, to the heads of sustainable and responsible investment at Barclays and Aviva Investors, contributors share their views in a film which talks of an unmissable opportunity for the financial sector to “not only ride the wave of change, but to direct and accelerate it”.
As Mark Carney, former Governor of the Bank of England, puts it: “The financial sector is an enormously powerful and effective force…and can be a force for good.”
The film also provides some much-needed colour to the fundamental questions many in our sectors are still asking: ‘What is ESG, and why does it matter?’
ESG is a broad term for measuring performance and behaviours across a set of non-financial criteria, loosely defined as “environmental, social and governance” factors. Those factors can be used by investors to help assess risk in their investments arising from externalities such as climate and social change.
As Too Big to Fail points out: ESG really should be seen as a bare minimum. The end-game is an industry that places greater value on positive environmental and social impact.
For us here at Social, we see ESG as symbolic of the direction of travel for the financial sector.
We all know ESG isn’t a panacea. Neither is private capital in some of our core sectors. There will be naysayers, and that’s okay. But the truth is, the ESG ‘movement’ has already arrived in the mainstream. The process requires evolution and harmonisation, but it’s only going to become bigger, better and more prevalent, particularly amid the demands of pension trustees and the continual flow of regulatory standards around sustainability.
The core sectors that we work across – housing, regeneration, property, infrastructure, local government – are a natural home both for ESG-driven investment and socially responsible investment (SRI). Right now, ESG is therefore an opportunity to align aspirations with those of responsible investors, tap into a wider investor pool, open up markets such as sustainable finance and investment, and benefit commercially from the competition all of that brings.
Speaking the right language and subscribing to a standardised or smart reporting approach, such as that created in the social housing sector, should be top of your list.
But outside of whichever frameworks or market principles you adopt, one of the most important tools you’ll have at your disposal is how you communicate your own, distinct narrative.
And in a space like ESG – just as with broader investor communications – how you create, shape and present your story, is what could set you apart.
ESG isn’t a one-size-fits-all. That also means it’s an opportunity to differentiate yourself.
So how are you using ESG to tell your story? And are you thinking big enough?
Luke Cross is director of Social’s London division and lead for our ESG and purpose-driven finance consultancy, Social Invest