As mentioned previously, developments in the investment industry overtook my personal learning objective. To remedy the dearth of sell-side equity research incorporating sustainability in my country, I had wanted to create annual awards for the best ESG-related research. As my posts highlighted, after much engagement, it was clear that awards were unlikely to increase the focus on ESG.
Nonetheless, fund managers’ interest in environmental issues has increased sharply in the past year, from an unexpected quarter. Last year two NGOs and a shareholder activist used our Companies Act to force our two largest banks to include resolutions at their AGMs to disclose their exposure to climate-related risks and to publish their policies on financing coal mining and coal-fired power. As our country’s first climate-related resolutions, these created substantial awareness of the broader E in ESG among local investors. Consequently, they increasingly want companies to report on the risks and opportunities they see from climate change and to adopt TCFD over time. And more investors use ESG data from CDP, Sustainalytics, MSCI etc.
Rather than launching awards, I encouraged the sell-side to get experts on climate change to present at investor conferences. Their rather scary forecasts garnered a lot of attention from the market. Although ESG is still not embedded in most locals’ investment processes (even PRI signatories), there has been some progress. And certainly, awareness is considerably higher.
Another development was becoming responsible for sustainability in our group, in addition to investor relations. This positions me ideally to embed sustainability into our group strategy, culture and operations, and to emphasize ESG in our investor interactions to cement its importance.
Reflecting on my PLO, there were four learnings. Firstly, that even ‘innocuous looking’ levers can have a large impact, if cleverly chosen. Small stakeholders were able to dramatically raise awareness of climate change in our market by forcing two banks to include it in their AGM resolutions. Even though the resolutions were defeated. Second, it’s amazing how quickly change can occur. Although there’s still a long way to go. Third, while we have made some progress in elevating ‘E’, there’s an opportunity to get experts to present to investors on ‘S’, probably using the SDGs in some form. And lastly, as Oliver noted, when your levers of change aren’t working, it’s important to be flexible and look for better ones!