The move from Viridian and CFS to provide personal advice in a scaled manner highlights a growing willingness within the industry to fix its own problems in lieu of waiting for the government.
Private markets are worth around $14 trillion globally, ASIC believes. It’s not sure, and that uncertainty hints at the wider problem – private markets, and their effect on public ones, is still largely a mystery.
From engagement to divestment: Woodchip mill saga a microcosm of ESG’s global path
ESG has become a lightning rod for nearly every part of the investment community. Among the coverage of greenwashing and virtue signalling one thing has become clear: so-called ‘non-financial’ risks can become financial risks quickly.
Nowhere was this more evident than in the story of the Spring Bay Mill, the venue of The Inside Network’s recent ESG Retreat.
Opening the conference was Paul Oosting, Ethical Lead at Future Super, who was directly involved in the action that turned one of the world’s largest wood chip mills into the beacon of ecological tourism it is today.
The story is one full of challenges, contradictions and outright conflicts, with the mill having been the centre of both activist and political campaigns, including a rare agreement between the Liberal party and the CFMEU.
While many of the events occurred more than a decade ago, there are many parallels to the fate and evolution of ESG investing as it stands today. Logging was a key political issue and despite growing concerns about the environmental impact, was set to continue unabated until growing community pressure catalysed the issue.
What began as protests amid concerns about the practices and long-term sustainability of the industry expanded into all-out stakeholder engagement. Chief among these was a combined focus on identifying those groups at most risk from the failure or success of the facility and identifying the key sources of capital.
The result was among the most powerful engagement campaigns in Australian history, involving the likes of Oosting and many others pressure lenders including the ANZ Bank and major shareholder Perpetual.
In many ways, the events surrounding Spring Bay Mill offer parallels to the ESG discussion today. Governments of both sides played a key role in both seeking to save and then abandon the project but offered little in the way of alternate solutions.
Corporates and individuals, in Australia at least, have been forced to lead the way on ESG issues, whether through diversity targets, environmental impact reporting and the like, with governments continuing to lag. Yet without clear legislation and regulation progress will likely remain slow.
The story of engagement vs. divestment follows a similar path, with a significant portion of the investment community seeing them as mutually exclusive. Clearly they are not, with both engagement and divestment central to building a more sustainable economy without blowing up what we already have.
Many of the same points could also be made about the fossil fuel industry today, as a sector with significant long-term challenges that has become relevant once again. While I won’t personally recommend an investment in fossil fuels, that does not mean they don’t have a role to play.
Among the biggest keys of any foray into ESG or values-based investing, is that we as investors and capital allocators are able to push the dial on issues that are important to our client base. Every dollar of capital flow is valuable and important.
Having what can be complex and emotional discussions with clients is challenging, to say the least, but offers advisers a rare opportunity to truly differentiate their businesses.
Once upon a time being fee-for-service or independent was enough to attract new clients.
Today, they are increasingly demanding more alignment with their own values.
