Scottish business leaders have questioned whether organisations could be in danger of falling out of love with Environmental, Social and Governance (ESG) after a study of 235 stocks found the metrics not only make a portfolio less profitable but are less likely to achieve their stated aims.
Research by the media group Fortune has suggested ESG does not result in the most efficient portfolio in terms of risk-adjusted returns.
Responding to the findings, Lord Willie Haughey told listeners to his Go Radio Business Show: “Environmental, Social and Governance have obviously been the buzzwords for the past five years but the recent reports suggest companies who have rushed in to invest in organisations that meet ESG criteria have showed a severe drop in the value of their funds.
“Could this mean a passion for this level of ethics in business is cooling off?”
Sir Tom Hunter acknowledged there were investors who did not want to fund ventures such as hydrocarbon companies, but at the same time openly admitted, if you opted out, you would have missed out on a cash bonanza.
“You and I talk about this transition to net zero by 2050,” he told his co-host Lord Haughey, “but we’re not turning off the spigot in the North Sea overnight and there has actually been some big energy companies coming together to offer solutions.
“So I think there is an important theme at play here. I don’t think it’s a question of simply investing in companies who are doing the right thing and then expecting that you’ll make a higher return.
“I believe it is a long-term investment decision, essentially, and I think that over the long term companies who take care of their people – and who take care of the planet – will ultimately take care of their profits too.
“However, it is important to recognise this is a long-term commitment.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here