WHAT ABOUT ESG? A path to a better world or a threat to returns?

ESG – short for Environmental, Social, and Governance – is a framework for evaluating how companies manage sustainability-related risks and opportunities. In ESG investing, environmental, social, and governance factors are integrated into investment decisions, alongside traditional financial metrics.

In this episode, James and Daisy discuss ESG. How has sustainable investing evolved? Why is there a growing backlash against ESG? What is greenhushing?

SOME RECOMMENDATIONS:

• John Elkington, a world authority on corporate responsibility and sustainable capitalism, coined the phrase “people, planet, profit” in 1994 to describe the Triple Bottom Line. Originally intended as a tool to drive systems change and transform capitalism – not just as an accounting framework – Elkington later called for a "product recall" of the concept.
• 21st Century Investing: Redirecting Financial Strategies to Drive Systems Change by William Burckart and Steve Lydenberg – This book explores the evolution of investing from traditional models to sustainable approaches that consider environmental and social factors. The authors advocate for a third stage: system-level investing, where investors actively support and enhance the stability and health of the social, financial, and environmental systems on which they depend for long-term returns.
• Aniket Shah is Managing Director and Global Head of Sustainability, Transition and Washington DC Strategy at Jefferies, a top global investment bank. We enjoyed this 10-minute video where he speaks about ESG and Impact Investing.
• SYSTEMIQ (2025) – This essay “Shock Therapy” explores what a deep reset of the sustainability movement might look like. Part of The Blue Whale Inquiry, it draws on insights from interviews with over 50 leaders across business, finance, government, politics, and civil society to understand what it takes to shift stubborn economic systems.

OTHER ADVOCATES, FACTS, AND RESOURCES:

• United Nations (2004) – ESG first appeared in the UN Global Compact report “Who Cares Wins”, developed with twenty financial institutions. It encouraged the financial sector to integrate environmental, social, and governance (ESG) factors into analysis, asset management, and brokerage.
• EU Taxonomy – allows financial and non-financial companies to share a common definition of economic activities that can be considered environmentally sustainable.
• IEA (2024) – “Global energy investment is set to exceed USD 3 trillion for the first time in 2024, with USD 2 trillion going to clean energy technologies and infrastructure. Investment in clean energy has accelerated since 2020, and spending on renewable power, grids and storage is now higher than total spending on oil, gas, and coal.”
• CDP – a global non-profit that runs the world’s only independent environmental disclosure system.
• The Taskforce on Inequality and Social-related Financial Disclosures (TISFD) – a global initiative to develop guidance for businesses and financial institutions to understand and report on impacts, dependencies, risks, and opportunities related to people. Growing inequality is recognized as a systemic risk with economic and political implications for global markets.
• Brundtland Report (1987) – Our Common Future, published by the UN, defined ‘sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs".
• Morningstar (2025) – “Despite reduced fund flows, global sustainable fund assets reached an all-time high of USD 3.2 trillion at the end of 2024, an 8% increase from the previous year and more than quadruple the size in 2018. Europe remains the leading market, housing 84% of the assets.”
• Generation Investment Management – “Generation is a pure-play sustainable investment manager. It is all we do. It is all we will ever do.” – Founded in 2004 by Al Gore and David Blood, Generation is a dedicated sustainable investment firm focused on long-term value, integrated sustainability research, and strong client alignment. It has demonstrated that mission-driven investing can deliver superior returns.
• Octopus (2024) – The Future Generations Report 2024 – “Celebrating the impact that you, as an Octopus shareholder, employee or customer, have on the world.”
• Dame Julia Anne Hoggett DBE, a British banker and risk manager, became CEO of the London Stock Exchange in April 2021. With a background in development economics focused on Sub-Saharan Africa, she believes the job of the capital markets is “to facilitate the investment that creates the invention, production, jobs and productivity that drives the economy, improves real incomes and peoples’ lives”.
• As noted in the episode, some state funds have been withdrawn from investors applying ESG policies. For example, in March 2022, West Virginia pulled assets from a fund managed by BlackRock, citing the firm’s “net-zero investment strategies that would harm the coal, oil and natural gas industries.”

Thank you for listening! Please follow us on social media to join the conversation:

LinkedIn | Instagram | TikTok

You can also now watch us on YouTube.

Music: “Just Because Some Bad Wind Blows” by Nick Nuttall, Reptiphon Records. Available at https://nicknuttallmusic.bandcamp.com/album/just-because-some-bad-wind-blows-3

Producer: Podshop Studios

Huge thanks to Siobhán Foster, a vital member of the team offering design advice, critical review an...