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April 5, 2024

Editor’s note: time for some ESG spring cleaning?

ESG abbreviation on wooden cubes and leaves
‘We need to stop talking about ESG and talk about specific issues like carbon taxes, fiduciary duty and asset owners,’ says ESG expert Robert Eccles (Photo: Oleksandrsh/Envato)

The latest edition of our Sustainable Views newsletter

Dear reader,

The biggest pushback against ESG has come from rightwing politicians, most notably US Republicans and red states. Robert Eccles, outspoken ESG expert and visiting professor at the University of Oxford’s Saïd Business School, suggests those on the left and right of the political spectrum need to take a good look at how they are approaching ESG initiatives and regulations. 

Earlier this year, JPMorgan Asset Management, State Street Global Advisors and Pimco withdrew from the Climate Action 100+ initiative, described as the “world’s largest voluntary investor engagement initiative focused on climate change”. Meanwhile, the Glasgow Financial Alliance for Net Zero and its related initiatives have seen a trail of departures in recent years. 

Speaking during an online event for journalists hosted by the University of Oxford, Eccles, who describes himself as leftwing, said some of this movement was “because of anti-ESG sentiment, but there are bigger issues”. 

“Lots of people I’ve spoken to are glad they didn’t join as they are not sure what they are getting out of these initiatives, which are becoming too prescriptive,” said Eccles. “We also need to do some of our own housekeeping.”

He suggested those advocating for strong environmental and climate action should take a more open-minded approach to potential solutions, and that those on the left should not dismiss out-of-hand more market-based solutions advocated by those on the right. Eccles drew a clear distinction between the climate sceptics in the Republican party and “many thoughtful Republicans” who are “dedicating their lives” to trying to achieve a carbon tax.

“We need a conversation between people with different views and expectations, not grounded in ideology from either side,” he said. “We need to stop talking about ESG and talk about specific issues like carbon taxes, fiduciary duty and asset owners.

“If you can get gay marriage in the US, you should be able to get a carbon tax,” he quipped.

The EU enjoys highlighting its credentials as a climate action leader, but member states have not followed through on their 2022 commitment to stop the public financing of fossil fuel energy through export credit agencies by the end of 2023, according to non-profits Both Ends, Counter Balance and Oil Change International.

They say just eight EU member states have upheld the commitment, while 10 countries either have no policy for phasing out export finance, or have issued policies that are misaligned with climate science, highlighting that Germany and Italy have left open the possibility of investment in fossil fuels until the end of the decade.

Finally, April 9 is set to be an important legal date, with a ruling expected at the European Court of Human Rights on three landmark climate lawsuits. 

The combined rulings on KlimaSeniorinnen vs Switzerland, Carême vs France, and Duarte Agostinho vs Portugal and 32 Others are expected to set a legal precedent on how human rights protect European citizens from climate change impacts. The rulings will also be influential in further interpreting states’ obligations to curb emissions to combat climate change. 

Sustainable Views will bring you news of the outcome as it happens. In the meantime, you can read the rest of this week’s news here

Have a good weekend,

Philippa

Philippa Nuttall is the editor of Sustainable Views 

 

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A service from the Financial Times