ESG in 2023


We had a similar situation during the financial crisis and in the early stages of Covid as we do today with energy prices in that the world changes dramatically and there are new priorities to contend with.


“That happened to some extent in 2022,” Wallace says, point- ing out that COP27 took place with little global co-operation or urgency. “But this is where we are optimistic that although the drivers for the energy shock link back to Russia and Ukraine, the energy landscape has changed permanently. “Many of the solutions to having affordable and secure energy, will fortuitously be the solutions that also ramp up green and sustainable energy,” he adds. Wallace points to research from E3G, a think tank, which claims that due to clean power, Europe avoided about €11bn (£9.4bn) worth of gas expenditure during 2021. “Had there been a higher rate of renewable penetration over the past seven years, and better uptake of energy efficiency solutions, we would have had less of a problem now,” he says. Investing in efficiency particularly helps improve energy secu-


rity and could avoid a repeat of the exorbitantly high energy prices we are paying today.


“The big trend for 2023 will be a growing recognition of the role environment solutions can play in tackling issues that are not necessarily green – energy security, for example,” Wallace says. “That is set to continue, because the problems we have around energy and the cost of food are not going to change. We will be discussing the same macro backdrop this time next year, it is just that the conversation around those issues will change.”


In the detail


The phrase we could hear regularly when discussing ESG in 2023 is “in the detail”, believes Hannah Skeates, co-head of sustainable investing at Allspring Global Investments. “There is a lot we are aware of from a sustainability perspec- tive, but we are getting more sophisticated, more into the detail about what it means, what the implications are and for whom,” she says.


New regulations, an energy crisis, growing inequality and the continuing journey towards net zero: what does the year ahead hold in store for sustainable-led investors? Mark Dunne reports.


Issue 119 | December-January 2023 | portfolio institutional | 37


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