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A 40-Year Journey in ESG – The Good, the Bad, and the Ugly.

There is a wonderful 2nd hand bookstore in my hometown that I visit often just to get the feeling of being surrounded by old books. I usually go through the economics section in detail, and today I found an absolute gem. “Socially Responsible Investing “by Sue Ward, published in 1986. 1986 did not feel like a long time ago. After thinking about it, however, I was still in primary school back then, Nelson Mandela was still in prison (which is often used as a case study in this book), and Chernobyl was still producing electricity (the first few months of the year at least, so it did not make it to the book as a case study).

Many things have happened in the last almost 40 years, and ESG (Environmental, Social, and Governance) investment, also known as socially responsible investment, has come a long way. But the insights and challenges outlined in this book are still remarkably accurate. It certainly made me think about what we have achieved in ESG over almost 40 years. In this blog post, I will explore the good, the bad, and the ugly aspects of our collective ESG achievement. The bottom line is that despite notable progress in certain areas, there are still significant challenges. So much so, I’m wondering if we, as sustainable finance professionals, have done, or are we doing enough.

Below are five challenges, with quotes, lifted from the book.

1. The Good: Expanding Investment Opportunities

“Creation of special investment vehicles will make it really easy for people to invest responsibly”

In 1986, there was one SRI fund in UK. One of the significant achievements of the industry is the creation of numerous investment vehicles. Unlike the limited options available in the past, today, we have hundreds, if not thousands, of ESG, low carbon, ethical climate, and environmental technology funds to choose from. This proliferation of investment options reflects the growing demand for sustainable investment opportunities and gives investors increasing choices. I would argue that we don’t have enough, though. A combination of risk and return constraints, investment universes, and personal preferences can only be met with a unique portfolio custom-built for each circumstance.

2. The Good: Collaborative Engagement

“One investor can have very little impact. Acting together, concerned investors can achieve change”

Ward’s book emphasised the need for coordination through coalitions of investors to maximise impact. Over the years, investor coalitions have successfully engaged with companies on various ESG themes. Collaborative initiatives like Climate Action 100 have demonstrated the power of collective action, so much so that these initiatives have drawn antitrust actions from its opponents. I consider the organised opposition as a triumph for ESG. As Gandhi said: first, they ignore you, then they ridicule you, then they fight you, and then you win.

3. The Bad: Resistance from Companies

“The first reaction from many companies is to be hostile”

Despite progress, many companies still exhibit a hostile attitude towards sustainable and socially responsible investors. This unfortunate reality persists, as ESG-focused investors face resistance and hostility when discussing these crucial issues with companies. I’ve personally engaged with hundreds of companies over the years, and I’ve been yelled at in private company meetings by various company executives (maybe a topic of another blog post?). It is obviously not acceptable, but more than that, I don’t get it. No one wants the company to succeed more than the investor, so why the hostility?

4. The Bad: Lack of Access to Information

“Information is the key to effective action in this area. If you know which companies are doing good things, and which companies are doing bad things, then you can act accordingly”

In 1986, the book emphasised the importance of access to information for effective action. While we now have more information available than ever before, investors still face challenges in accessing comprehensive and reliable data. Surveys consistently highlight the lack of information as a key obstacle preventing investors from fully embracing sustainable investment practices. We launched Impact Cubed more than five years ago to solve this problem. I firmly believe that we don’t lack information, but we still lack access to it.

5. The Ugly: Demonstrating Financial Prudence

“Because investors invest for the financial returns and because trustee investors have to achieve the best return they can, it becomes important to demonstrate that the socially responsible approach is not poor judgement, indeed that it might do rather well”

This was the jaw-dropper for me. In almost forty years, we have not progressed much in advancing the understanding or the attitudes around the interplay between risk, return and ESG. It is still commonplace to think that one would need a significant compromise in risk/return to achieve anything meaningful in ESG. It is simply not true. We have plenty of information and understanding to prove it, but somehow the attitudes around it remain the number one challenge. I think it is shameful.


Both progress and challenges have marked the journey of ESG investment over the past four decades. The creation of numerous investment vehicles and the success of collaborative engagement initiatives signify positive developments. However, the resistance faced from companies and the persistent lack of access to information hinder further advancements. Additionally, the ongoing confusion in the public domain linking financial prudence and sustainable investing remains a central challenge.

It took 66 years from the first sustained flight to landing on the moon. It is widespread in the sustainable finance circuit to think we are doing an extraordinary job. After comparing the socially responsible investment challenges from 1986, and our progress against those. I’m not so sure.


All Credit to Sue Ward and the book: “Socially Responsible Investment – a guide for those concerned with the ethical and social implications of their investments”   There were a few 2nd hand copies for sale on the internet at the time of writing.

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