Why is there an ESG movement in fund management?

Why do people listen to John Lennon’s Imagine?

It’s because people believe that they can change the world.

You can be cynical and suppose that ESG is the cynical manipulation of this delusion by the fund management and many people do.

You may argue, as many in Government argue, that ESG is actually about managing risks and is nothing to do with changing the world.

But whether it is getting the bottle in the bottle bank or voting your shares or making an active investment decision, you are making a statement, if only to yourself that you are changing the world.

I was very struck by a comment from Sarah Wilson on a webinar organised by Georgia Stewart of Tumelo. It was simple “everything’s connected” but in the context of the discussion it meant “everything matters”.

What we do matters. Which is why I am flabbergasted that we are still talking about financial products as if they didn’t make a difference and that our purchasing preferences and our engagement with what we own don’t matter either.

Is this really self-delusion?

I believe in the power of prayer – not because I think prayers are answered – clearly we all pray for different outcomes and not all can happen. I believe that prayer focuses the mind on what we want and in prayer we are forced to question why we want it. I have often found that in praying for something I have realized that my prayer is misguided, I really want something else.

My words fly up, my thoughts remain below.

Words without thoughts never to heaven go.

Claudius knows he is lying to himself as he prays, prayer crystallizes his lack of self-esteem.

But with virtuous investing, for that is what we think we are doing when we invest our time and money in responsible ways, we add to our self worth. It is the same value add as we get from charitable work or charitable giving.

From a behavioral point of view, we are prepared to give up return for social good but we are also very proud of our work as  personal to us. The seminar this afternoon concentrated on stewardship and on Tumelo’s software which allows all of us to vote the shares in our funds (even if it is the fund and not us that owns them). We are making a difference as it is our decisions that count – like our votes in any election.

Which leads me on to the diversity of approaches. It seems that we need diversity of ESG styles just as we need competing  religions. I was amazed to discover this research by https://www.fundecomarket.co.uk/

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From a behavioral point of view, this diversity of styles makes sense, we may worship one God but there are many ways to  him or her. The choices we make over how to invest responsibly can define our attitude to the problem though in reality few of us get so far as to think whether it is better to invest in a fund that excludes the bad or one trying to make the bad better. These are methods of getting to the same place.

I have been going to the gym this week, I’m going to one in Tower Hamlets and its Ramadan so I’ve had plenty of religious conversation. It strikes me that the God I pray to at Wesley’s chapel and the God my gym-mates pray to is an extension of our spirit and when we talked last night, we all talked of love.

What thou lovest well remains – the rest is dross

My favorite line n 20th century poetry, my favorite line of poetry. Love unites all things, it is the common feature of religions and the common feature of responsible behavior. It is our love for each other that makes for the movement to stop climate change and that’s why we invest for social good and reward good governance with our money.

This spiritual dimension to investment goes way beyond “faith investment”, though faith investment is a little part of it. What little I have read of John Stuart Mill has struck me with the man’s spirituality and this dimension to his vision of economics I saw directly inherited by Mark Carney in his four Reith Lectures.

Wanting to change the world is noble and right. It is not fanciful, it springs from a deep sense of our individual worth and if we lose the ability to pray for better (like Claudius) we have nothing left. I pray for a better world and believe in the power of prayer. I invest for a better world and believe that in doing so I am not just making the world better but making me better to.