‘ESG integration’ is only one of many factors that characterise responsible investment, according to investment manager Australian Ethical. Aside from environmental, social and governance (ESG) integration, a number of other factors must be considered for responsible investment to truly live up to its name, according to Australian Ethical head of ethics Stuart Palmer. Mr Palmer outlined a number of other “dimensions” to responsible investment, including negative screening, positive screening, the influence investors had on companies and governments, and the impact of the UN’s 17 sustainable development goals.
Speaking in Sydney on Tuesday, Mr Palmer said that while it was a “good thing” that funds were taking environmental and social impacts into account, he indicated that there were limitations to only considering ESG integration. “One downside of purely ESG integration approach is that it tends to be what I call ethically passive,” Mr Palmer said. “To explain that, if I’m adopting an ESG integration approach and I’m considering continuing or furthering investment in fossil fuels, then I’m gonna think about things like how likely it is that governments are going to take strong climate policy action.”
The rest of this article can be found at investordaily.com.au.