But interconnectivity between people, through dialogue, has to depend on people communicating and understanding ESG+C factors.
Krishan believes that another part of the answer towards figuring out solutions has to be in conversation.
He says: “We have to have people talking about these things with some sort of intellectual, moral and pragmatic rigour, and if you have people deciding on both sides, you’re much more likely to uncover how you can get balanced definitions and solutions.”
Conversations can also lead companies to put aside greater resourcing.
This is what Krishnan sees happening at present. “On the positive side, the fact we are having regular conversations about ESG, and companies are actually hiring resources, and investors also have resources is a positive sign.”
Steady growth and diversification
Against this backdrop of change and dialogue, dynamism and tension, Masja Zandbergen-Albers, head of sustainable integration at Robeco, reports positively on the steady growth in interest in ESG.
Zandbergen-Albers describes clients continuing to want to see more of a positive impact with their investments, adding environmental and social materiality to their investment processes.
She says: “Topics such as net zero, biodiversity, stewardship and SDGs [the UN's Sustainable Development Goals] in general are subjects that we discuss with our clients more and more.”
In response to this intensification of interest, Hamilton Claxton at RLAM describes how ESG has become more diversified. “Lumping it into one category can be misleading,” she says.
Zandbergen-Albers agrees, explaining how ESG investment options are widening.
“Sophistication in the market place is increasing, which means sustainable investing is now no longer one 'catch-all' phrase, but we are talking to our clients about the many different topics and the different ways they can implement their sustainability goals, alongside their financial goals.
“This happens across asset classes and across different investment strategies (quantitative, fundamental, index etc.).”
Different styles of sustainable investing
Some of these different ways of investing are outlined in the UN’s Stewardship guidelines in conjunction with the United Nations Principles for Responsible Investing.
These range from ethical investing, which screens out industries and companies considered damaging to people or planet, to responsible investing which involves engaging with companies through voting, and applying influence individually or collectively.
Robeco engages in ESG integration, where some ESG investments are integrated into part of a wider portfolio, to add stability and partial risk mitigation.
Zandbergen-Albers explains: “If you do ESG integration well, it can be very effective. We have seen added value for our global and emerging market fundamental strategies in terms of improving the investment analysis and contributing to alpha generation.”
She continues: “Creating and showing impact with investments in listed securities is much more difficult. Very little new capital is raised in equity and bond markets. Therefore an important part of our sustainable investing strategy is active ownership.”
