ESG in 2023


Considering environmental, social and governance (ESG) fac- tors when investing long-term capital feels needed now more than ever. Indeed, with the world recovering from the impact of a pandemic, war in Ukraine has increased the pressure on resources. The result is that the cost of food and energy has leapt to levels not seen since the early 1980s in some parts of the world.


Energy security has become a priority for governments, leaving some to wonder if their decarbonisation plans might take a backseat until prices fall to affordable levels. Access to health- care is another issue as systems are under strain following Covid, while the spectre of recession could fuel rising inequality.


All of this is just another step in the evolution of ESG, which has come a long way since simply not investing in weapons or South Africa. The question is, how will what is happening in the world today influence the discussions between asset own- ers and those they entrust to manage their capital? We spoke to the members of our ESG Club to find out.


The cost of living The affordability crisis will continue to feature in conversa- tions during 2023, with more attention paid to the social ele- ments of sustainable investing, says Caroline Ramscar, head of sustainable solutions at Legal & General Investment Manage- ment (LGIM). One area LGIM will continue to focus on is promoting the liv- ing wage in light of the leap in energy and food prices. Early in 2022, LGIM co-filed a resolution at a supermarket chain to ensure it was paid across its business. “How companies bal- ance that with inflation will be interesting, and how we are tak- ing that into account in company engagements is something clients will be interested in for 2023,” Ramscar says.


Solving traditional problems Jon Wallace, who manages the Jupiter Ecology Fund, says that in 2022 environmental solutions progressed where there were multiple, converging drivers for their uptake. He believes this will continue into 2023, although with a different emphasis.


ESG: THE YEAR AHEAD


36 | portfolio institutional | December-January 2023 | Issue 119


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