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Silver lining for ESG seen in U.S. withdrawal from Paris accord

The decision by President Donald Trump to withdraw the U.S. from a global climate pact and the U.K.'s departure from the European Union might not be as bearish for responsible investing as they appear.

Panelists speaking Monday at the Principles for Responsible Investment PRI in Person conference in Berlin discussed the U.S. withdrawal from the Paris Agreement on climate change, which was signed by a number of nations in 2015, as part of a session considering responsible investment regulation.

Glenn Davis, director of research at the Council of Institutional Investors, said while on the face of it the withdrawal looks like it has been a blow to sustainable investing, it is important to consider the attention from the investor community in terms of it being an "impetus" and leading to investors taking charge. Mr. Davis added this is "not as bearish" a situation as it might seem on the surface.

Curtis Ravenel, global head, sustainable business and finance at Bloomberg, said the withdrawal "had a perverse, positive effect in some ways."

Mr. Ravenel said there is a tendency in the U.S. for reliance on policymakers to "sort things out." In the case of the climate pact, he said businesses and the financial community instead "saw this as an opportunity to take a leadership role."

He said there is evidence all through the investment chain — from asset owners to money managers to companies providing the information — that this is working.

Regarding Brexit, Jen Sisson, senior investor engagement manager at the Financial Reporting Council, said the impact of Brexit on responsible investment in the U.K. is as yet unknown.

She said there are "great things happening in the EU" regarding climate change, "so clearly there is a risk we in Britain might not be involved in these things." However, she said the force driving responsible investment is global, and as U.K.-listed companies are increasingly global, they are "likely to continue to implement global best practices, and certainly the FRC is very in favor of continuing to strengthen the stewardship code."