LongView founder and principal David Cantor was quoted last week by investment research firm, Morningstar, in an article about why ESG investing is here to stay. In "10 Reasons Why ESG Won’t Be Stopped", Leslie Norton, Morningstar's editorial director for sustainability, argued that recent political backlash is unlikely to pose a serious threat to ESG investing.
For one thing, ESG offers a more complete understanding of the financial risks companies face than traditional frameworks. As the physical threats posed by fires, floods and other climactic events increase, and as the reputational risk from ignoring climate impact grows, so will the demand for companies to understand how climate change will effect their bottom line. For companies that are ahead of the curve, the transition to a carbon free economy also comes with opportunities for growth. Meanwhile, consumers' increasing loyalty to ethical brands is unlikely to change anytime soon, which benefits companies that can prove their commitment to sustainability.
Interest in sustainable investing continues to rise, especially among women and young people, and a decade of performance data shows that socially and environmentally responsible funds can be just as profitable as conventional funds.
LongView's experience in recent years supports Norton's arguments, as the number of new clients seeking LongView's assistance in aligning their investments with their values continues to grow.
At the end of the article, David sums up what is ultimately an optimistic outlook for ESG, despite the turmoil of the last year and the storm of criticism that included accusations of "greenwashing" from the left and "woke capitalism" from the right.
“The controversy is an opportunity for us to talk to our clients and prospective clients about what this is all about—to use our power as shareholders to push companies towards a renewable economy and a modicum of social justice,” he says.