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Investment Insights

ESG Data: “Who will guard the guards?”

Headshot of Will Ballard


  • The Danger of Taking ESG Data at Face Value

The integration of environmental, social and governance (‘ESG’) factors can help deliver improved investment outcomes.

We consider ESG ratings agencies an increasingly key part of the responsible investment ecosystem. But caution may still be required in applying their data. In this article Will Ballard, our Head of Equities, discusses the associated benefits and challenges of using them.

Across the UK and Europe there is a growing regulatory drive to try and put rules and structure around Responsible Investing. There is no doubt that this is the right journey for us to be on. Scandals surrounding “greenwashing” (the act of overstating your green credentials) undermines credibility and has the potential to take the wind out of an investment category that should help with tackling climate change as well as other environmental and social ills.  

We can roll out a near un-ending list of policies, procedures and commitments, as well as concrete examples of how we have undertaken our duties of stewardship. This is not enough. Rightly, there is a desire to see and understand how these are embodied in the way we run our funds.  

The benefits of using an ESG Ratings Agency are clear and tangible. The problems are less obvious but must still be approached with transparency. They do not undermine the use of these services. They are a huge improvement on anything that has been historically available. They do however show how much more work still needs to be done.  

The full article is available here

The nature and structure of what we are demanding of companies and what is being demanded of us is changing and growing at a breakneck pace. For us all to be able to meet and evidence our ESG commitments the ESG ratings agencies are the best tool we have, but they are imperfect and provide only part of the picture.

Will Ballard, Head of Equities
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