Financial Services Technology Panel grasps the ESG nettle

The Financial Services Technology Panel has set out to be “the place to come to debate the issues of the day”, so began by tackling the vast, and often controversial, subjects of Environmental, Social and Governance, through a series of events.

The first one in November 2020 aimed to inform, explore, and raise awareness around ESG – its history and relevance to us today:

“Environment, Social and Governance – What it really means and why it matters in Financial Services” showcased our own members’ expert knowledge.

Anders tracked ESG back to 1998, when John Elkington, the authority on Corporate Social Responsibility, defined value creation for business as being more than financial. Indranil examined what it will take for the business model to focus on sustainability – to create value through sustainable innovation. Ray told us about how the Government is using its own purchasing process to ensure adherence to good ESG principles in its supply chain, and how it has been consulting on possible regulation to encourage good corporate behaviour. Gary focussed on the “S” in ESG, educating us on Diversity and Inclusion, in particular on Digital Accessibility in the Financial sector. Rob asked what might persuade those who are slow, to adopt ESG, and gave us a challenge – to define how we in the WCIT can further the Social Value agenda. And all of them were ably managed by our event chair, John.

We kicked off 2021 with our second event in January, asking if ESG will deliver its promise:

Is the promise of ESG false? Or will it be our saviour?” tested whether a WCIT online debate can change minds. And it did!

We ran this event as an inter-livery debate with over 150 attendees from WCIT, WCIB, World Traders, Marketors, Stationers, Actuaries, and the Financial Services Group, and gathered a panel of world class speakers and chair.

The debate was opened by the Master, Mark Holford, and Julia George introduced the FS Tech Panel. Alderman Professor Michael Mainelli masterfully managed a lively interaction between “For” and “Against” speakers, polls, and Q&A.

The key debate question “Is ESG essential to achieving sustainability?” was polled to the audience. The “Yes” vote dropped from 86% at the start to 60% at the end of the debate. How did this happen?

Professor Mainelli reminded us that climate change is not a new topic and has been on the table in the City since 1985, but what have we achieved in 36 years?

Richard Peers opened the debate, arguing for ESG, maintaining “there is no Planet B” and argued not to focus on the negatives, the promise is there. He likened the current focus on ESG only a matter of one format over another, such as VHS giving way to Netflix – it is here to stay.

Jenny Knott countered, arguing that no-one is saying ESG is not a force for good, but it is the how that is in question, voicing her concern that a potential ESG index would only be a gravy train. The many ESG indices, e.g., MSCI, Morgan Stanley’s, are self-regulating and still focus on the financials.

Laurent Rousseau argued for the need for Ethical Asset Valuation, citing Christian Gollier’s book, and maintained that as funds flow into socially virtuous financial investments, the cost of capital reduces and the price in the long term will reflect the true value (financial and social) of the investment.

Mike Wardle argued that ESG is a minor step towards making an impact. The first argument is over-reliance on ESG data provided by companies themselves, second is funds announcing their compliance without making a real difference, so Greenwashing.

And so, the arguments raged back and forth during a lively question and answer session.

We will soon be announcing our next ESG event in our series so please keep an eye on our website for further details.