Responsible Investment News

ESG alone is not enough, says Australian Ethical

Speaking in Sydney on Tuesday, Mr Palmer said that while it was a “good thing” that funds were taking environmental and social impacts into account, he indicated that there were limitations to only considering ESG integration.

“One downside of purely ESG integration approach is that it tends to be what I call ethically passive,” Mr Palmer said.

“To explain that, if I’m adopting an ESG integration approach and I’m considering continuing or furthering investment in fossil fuels, then I’m gonna think about things like how likely it is that governments are going to take strong climate policy action.

“‘Are they going to introduce a serious price on carbon?’ And then I’m going to think about, given what I expect is going to happen there, what impact would that have on fossil fuel companies with fossil fuel projects?”

If investment funds felt governments would follow Trump’s lead and pull out of the Paris Agreement, then they would be “quite happy” to continue investing in fossil fuel projects because of a belief that the projects would be likely to remain viable, Mr Palmer said.

“So a purely ESG integration approach doesn’t actually commit a fund to investing for a better future,” he said.

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