When it comes to ESG, panelists at the Pensions & Investments WorldPensionSummit could agree on one thing: definitions aren't universally understood or agreed upon.
And their discussion, titled "Polarizing Investments — Overcoming Roadblocks in Achieving Net-Zero Goals" shed some light on that murkiness.
"I don't think I've really understood how people interpreted (ESG) in different ways," or how "triggering" it could be for some U.S. residents, said Paul Todd, director of investment development and delivery at the National Employment Savings Trust in the U.K.
In the U.S., ESG backlash has even led BlackRock CEO Larry Fink to stop using what he said had become a "weaponized'' term.
Among the definitional challenges, Charles Van Vleet, assistant treasurer and chief investment officer of pension investments at Textron, remarked that the U.S. manufacturer already complies with some 9,000 existing regulations and laws that govern its corporate behavior, from environmental guardrails issued by the Environmental Protection Agency, social guardrails on worker safety, child labor, minimum wage, and governance practices to curb risks, such as the duality of CEO and chair of the board.
A lot of the ESG debate, he said, seems like "old wine in new bottles.''
Still, the discussion was helpful he noted. "Maybe it's just thinking about this as expanding the toolkit of information.''
Much of the opposition in some states, noted Curtis Loftis, state treasurer of South Carolina, stems from the S and G aspects, with the government expected to set and enforce regulations on the environment. "People don't want to be told how to act.''
Added Ingrid Albinsson, vice chair of the board at Swedish pension fund AP2: "We have different definitions… different languages… We also come from different situations," which is why investors need to get to an understanding of what it takes to meeting challenges, such as climate and the energy transition.
