The Green Pill Volume XVI: Tussle between ESG and anti-ESG hots up by SBI Capital Markets
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The ESG world is getting sharply polarised, belying the very unity the concept demands of humanity. On one side are regulators, especially Central Banks, sounding clarion calls and tightening their screws on their regulated entities. With the ECB leading the charge, others, including the RBI, have followed suit. Securities regulators have mirrored these developments, in a coterminous effort for inter-operability.
On the other hand, are financial institutions, whose hands are tied from lending to so-called ESGnegative sectors. Tall commitments made by major institutional investors are now falling apart as push comes to shove, and investors stare into eyewatering returns being made by conventional energy firms, without them getting their share of the pie. This pressure, percolating from the bottom-up, has led to the US SEC putting on hold its climate disclosures after multiple pleas against them, besides withdrawal of major investors from climate alliances.
Who are the detractors causing the fissure?
Not every detractor is of the same shade. We classify the ethical matrix of participants on a red (social) – green (environmental) axis, and observe that the landscape contains four principal archetypes – traditionalists (those who are not favourably inclined to climate and social goals), eco-sceptics (those in favour of social justice but critical of closing down polluting industries), sociosceptics (those who recognise the scientific imperative of climate change but not that of social change), and finally ESG champions (those who believe in both E and S causes). Further, not every ESG champion is a corporate ally, as they may not have faith in the ability or willingness of corporations to act on these goals.
This fascinating and complex landscape highlights the importance of consensus building in a multinational, multi-ideological movement like ESG. Further, since the cause has time sensitivity, the emergence of effective and efficient leadership is the need of the hour.
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