Will the bushfires prompt a deeper look at ESG?

The Australian bushfires could prompt an increased awareness of sustainability funds, according to Mirova fund manager Jens Peers, as Australia lags behind Europe in uptake of these strategies.

Mirova, an affiliate of Natixis Investment Management, runs a €919 million ($1.5 billion) Global Sustainable Equity fund. While it was launched back in 2013, Australia had been slow to invest in products which focused on environmental, social and governance (ESG) concerns.

Peers said: “People in Australia are sceptical of ESG but with all the bushfires, they are very aware of climate change and we are seeing interest from super funds now in how ESG can be done properly.

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“People think ESG is an alien concept but it’s just investing, it doesn’t need to be something people are scared of.”

Holdings in the fund included blue-chip equities such as Visa, Microsoft and Novo-Nordisk which proved an ESG approach did not mean investors missed out on the common holdings found in other global equity products. The difference in this fund was the managers sought out companies which were positively exposed to, or could develop a solution to, sustainable development issues.

Greenwashing

Peers pointed out firms were sometimes fearful of going down the ESG route as they were worried about being targeted for ‘greenwashing’, when a fund falsely implies it has green credentials. This was made worse by the fact there was not yet a universal standard for reporting a fund’s ESG impact which made it easier for funds to potentially skew their results.

“Greenwashing is very dangerous for the industry, there is a lot of marketing involved in it,” Peers said.

“Doubters will use those examples of greenwashing where they have gathered lots of assets and attack the whole approach.

“Some firms fear they will be accused of greenwashing and this is holding them back from trying.”




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