Missing in Action – The lack of ESG capacity at leading investors

Third of signatories to UN Principles for Responsible Investment employ no ESG experts

New research published by independent climate change think tank E3G has revealed that 33% of the investor signatories to the UN Principles for Responsible Investment (PRI) do not employ any environment, social and governance specialists.

E3G’s ‘Missing in Action’ report has also found that a further 20% employ only one such expert. This means that over 500 of these world leading investment companies, managing $6.9 trillion in assets, employ one or fewer experts in responsible investment.

E3G points out that the failure of these companies to back up their pledges to the PRI with action on the ground not only poses a reputational risk, it also poses a serious risk to future economic security.

The globally agreed goal of keeping the increase in the global temperature to well below 2°C, as enshrined in the Paris Agreement on climate change, can only be met if investors fully appraise and respond to the risks and opportunities posed by climate change. By failing to employ ESG specialists these investors are not only putting their client’s assets at risk, they are putting global economic stability at risk by increasing the chances of an economic shock as dangerous levels of climate change unfold.

E3G is calling on global investors to rapidly increase their ESG capacity and to mainstream training for all staff.

Ingrid Holmes, Director of E3G said:

“If these companies do not have the capacity to assess climate change risk they are not only putting their own companies at risk, they are locking in investment in a high carbon future that has the potential to cause a global economic crash. These investors are at the heart of the solution to avoiding dangerous climate change. Climate change is a global emergency and the investment community must now act accordingly.”

Mike Clark, Founder Director of Ario Advisory said:

“One key conclusion, offering guidance to policymakers and regulators seeking to take forward the Financial Stability Board’s Task Force Recommendations, is the need for asset owners to increase capacity to develop robust policies to address climate-related risks. This will drive critical change.”

ENDS

Notes to Editors

1. E3G is an independent global think tank, working to accelerate the transition to a low-carbon economy. E3G specializes in climate diplomacy, climate risk, energy policy and climate finance.
2. In 2016, E3G was ranked the number one environmental think tank in the UK by the Go To Think Tank Index, second in Europe and sixth in the World.