If investors can’t help squirming when asked to define it, maybe it is time to scrap ESG, even as an umbrella term. Instead of using overbroad, misunderstood or vague labels, institutional investors should be speaking to their clients in terms of the specific factors they think are relevant, the information they collect and analyze, the science behind their methodologies and the results (financial and non-financial) they believe these generate. This would likely accelerate the emergence of categories more useful than a generic “ESG investing” label. Hopefully, these categories will be ones that investors will be comfortable using in front of journalists (and the investors’ clients).
There are instances when we at Valoris find ourselves still using the term ESG investing for lack of a better alternative. But we do so in the full knowledge that it is an imprecise term, susceptible to accidental and intentional misuse. Wherever we can, we will endeavor to employ more precise terminology, providing explicit reference to context and purpose, in order to contribute to clearer expression and understanding of what enlightened investors are actually doing or should be doing.
Mike Lubrano is Managing Director at Valoris Stewardship Catalysts
Learn more about Valoris at www.valoriscatalysts.com.
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Mike Lubrano at +1 (301) 335-5238 (USA) and Martin Steindl at +43 650 911-8768 (Europe),
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About Valoris Stewardship Catalysts
A unique advisory services firm that helps investors and portfolio companies improve corporate governance, investor stewardship and sustainability performance in their operations. Valoris was founded by experienced practitioners in the fields of corporate governance, stewardship and environmental and social sustainability. Valoris serves institutional investors, impact funds, development finance institutions, financial institutions and their portfolio companies. Headquartered in Washington D.C. (USA) and Vienna (Austria), Valoris operates worldwide. www.valoriscatalysts.com