As more investors back responsible businesses and funds, the growth of assets under management that are ESG-compliant (under one standard or another) has been soaring in recent years. What's more, the geographic scope of this market is growing. A few years ago it was mainly big in Europe , but it's now picking up fast in the US and expanding to Asia, driving a massive boost this year alone. Why? By throwing a glaring spotlight on global inequality, the thinking goes, the pandemic has been a major driver of investment that focuses less on hard profits and more on socially and environmentally responsible capital management. Will this sustainability surge carry on next year? We take a look at ESG investment's upward trend over the past eight years — globally and by region.
The forced slowdown of global economic activity due to the coronavirus pandemic has slashed carbon emissions around the world, opening a unique opportunity to make real progress in the fight against climate change. But there is fear that it won't be enough, and the world will go back to its old ways when we get rid of COVID-19. However, even before the public health crisis, some major emitters had already taken ambitious steps to rethink how to make their own policies more sustainable.
In Canada, the prominence of oil in the economy doesn't mean that it should hide from the existential challenge of climate change. Fossil fuel profits make Canada not only more responsible but gives the nation the resources to commit to a bold climate policy, Canadian Minister of Natural Resources Seamus O'Regan said during a panel discussion on sustainability at the 2020 GZERO Summit in Japan.
Dawn Farrell, president and CEO of Transalta, Canada's largest clean electrical company, noted that we can apply many of the lessons learned from battling COVID-19 to the global struggle against climate change. The same way governments and the public sector have worked together successful vaccines, there must be equal collaboration on carbon prices, which must be set by governments and not the market alone.
Indeed, the pandemic is an opportunity to entirely transform the economy of countries like Japan, which recently committed to producing net zero carbon emissions by 2050 under new Prime Minister Yoshihide Suga.
Other nations with less muscle, though, may struggle to phase out highly polluting fossil fuels such as coal, which still powers dozens of countries across Asia. That's why rich countries should engage and help them, said Tadashi Maeda, governor of the Japan Bank for International Cooperation.
Meanwhile, countries with both the energy and financial resources to aspire to net zero in the near term should deliver on their Paris Accord climate commitments — and support businesses that are doing the right thing for their bottom line and the planet at the same time. For instance, O'Regan argued that Canada understands where the environmental, societal, and corporate governance (ESG) market is moving, for instance on liquefied natural gas.
ESG lately has become code for simply curbing emissions, but Farrell said that ESG investors want to know you can put your money where your mouth is, and show progress… without big disruption like calls for divestment. Indeed, for Maeda pulling back from all fossil fuels is only one aspect of ESG, and not even the most important right now in most emerging economies.
Beyond ESG investing, companies are also learning how to operate in more responsible way. One of them is Sony, a Japanese conglomerate which the Wall Street Journal recently ranked as the world's most sustainable managed corporation.
So, what's the key to Sony's success on sustainability? Dialogue with investors is crucial, explained Kenichiro Yoshida, the company's chairman and CEO.
With elected governments it's a bit different, but even then the way forward is changing our mindset. Farrell said that they are thinking less about who will be in power to set regulations, and more about the values of the people that put the politicians in power to come up with sustainability policies. If you know the people, you can predict how the governments they elect will act in the future.
Watch the above video to learn more insights from our panelists on COVID-19's impact on global sustainability efforts.
Listen: Benjamin Franklin famously called on American business leaders more than two centuries ago to "Do well by doing good." To him, that meant creating companies that were not just about the bottom line, but also that helped foster happier and healthier communities. Now, as 2021 approaches and the world recovers from the greatest crisis of our lifetimes, sustainable investing is a bigger discussion than ever. What does it mean, and how does it not only help the environment and societies but also build your bottom line? That's the topic of the latest episode of Living Beyond Borders.
Moderator Caitlin Dean is joined by Harlin Singh, Head of Sustainable Investing at Citi Private Bank; Elree Winnett Seelig, the Head of ESG for Markets and Security Services at Citi; Rohitesh Dhawan, Director of Global Energy and Natural Resources at Eurasia Group; and Gerry Butts, Eurasia Group's Vice Chairman.
Elree Winnett Seelig
Head, ESG, Markets & Securities Services, Citi
Head of Sustainable Investing, Citi Private Bank
Vice Chairman, Eurasia Group
Managing Director, Energy, Climate & Resources, Eurasia Group
Practice Head, Financial & Professional Services, Eurasia Group
On Wednesday, September 16th, GZERO Media — in partnership with Microsoft and Eurasia Group — kicks off a series of livestream discussions about the most important issues facing the 75th UN General Assembly. The first event, Net Zero: Climate Ambition and Action, will consider how we get to net zero emissions.
Our panel will be moderated by Julia Pyper, host and producer of the Political Climate podcast, and will include Gerald Butts, Vice Chairman & Senior Advisor, Eurasia Group; Lucas Joppa, Chief Environmental Officer, Microsoft; Rachel Kyte, Dean of The Fletcher School, Tufts University; and Mark Carney, Finance Adviser to the UK Prime Minister for COP 26 and UN Special Envoy for Climate Action and Finance.
On the day of the event, visit https://www.gzeromedia.com/unga/livestream to view the livestream presentation.
Net Zero: Climate Ambition and Action: Wednesday, September 16th, 12:30p ET/9:30a PT/5:30p BST
Sign up to be notified about this and other events here.
GZERO Media, in partnership with
Microsoft and Eurasia Group, is proud to announce a series of livestream panels, featuring global experts discussing the most pressing issues facing the 75th United Nations General Assembly.
The 2020 UN General Assembly: Connecting Through Crisis
- Net Zero: Climate Ambition and Action: Wednesday, September 16th, 12:30p ET/9:30a PT/5:30p BST
- Julia Pyper, Host and Producer, Political Climate podcast (moderator)
- Gerald Butts, Vice Chairman & Senior Advisor, Eurasia Group
- Lucas Joppa, Chief Environmental Officer, Microsoft
- Rachel Kyte, Dean of The Fletcher School, Tufts University
- Mark Carney, Finance Adviser to the UK Prime Minister for COP 26 and UN Special Envoy for Climate Action and Finance
- Crisis Response & Recovery: Reimagining while Rebuilding: Wednesday, September 23rd, 11a ET/8a PT/4p BST
- Susan Glasser, staff writer and Washington columnist, The New Yorker (moderator)
- Brad Smith, President, Microsoft
- Ian Bremmer, President and Founder, Eurasia Group & GZERO Media
- Jeh Johnson, Partner, Paul, Weiss, Rifkind, Wharton & Garrison, LLP and former Secretary of Homeland Security
- John Frank, Vice President, UN Affairs at Microsoft
- Digital Inclusion: Activating Skills for the Next Billion Jobs: Wednesday, October 7th, 11a ET/8a PT/4p BST
- Sherrell Dorsey, founder and CEO of The Plug (moderator)
- Rohitesh Dhawan, Managing Director, Energy, Climate & Resources, Eurasia Group
- Kate Behncken, Vice President, Microsoft Philanthropies
- Parag Mehta, Executive Director and Sr Vice President, MasterCard Center for Inclusive Growth
- Dominique Hyde, Director External Relations, UNHCR
- Lisa Lewin, CEO of General Assembly
- Digital Peace: Trust and Security in Cyberspace: Wednesday, October 14th, 11a ET/8a PT/4p BST
- Meredith Sumpter, CEO, the Coalition for Inclusive Capitalism (moderator)
- Marietje Schaake, International Policy Director, Cyber Policy Center, Stanford University
- Marina Kaljurand, Member, European Parliament; Former Chair, Global Commission on the Stability of Cyberspace; Former Minister of Foreign Affairs of Estonia
- Tom Burt, Corporate Vice President, Customer Security & Trust, Microsoft
- Dapo Akande, Professor of Public International Law, University of Oxford