Every UK government since the 1990s has claimed sustainability to be at the heart of its town planning policy but problems of “greenwashing” persist in the industry. If anything, the environmental, social and governance challenge for financial sectors is even greater (“ESG ratings face examination in fight against greenwashing”, Report, May 28).
First, the sectors are relatively late to the party. Acute timeframes increase the risk of poor decisions. Secondly, the scope of ESG is vast; embracing wide social, governance and environmental issues which can often clash, certainly in the short term.
Finally, it is complex. Adrienne Klasa’s article quotes people surprised to see oil and gas in a portfolio that is “ESG best in class”. But the use of fossil fuels is recognised as a key component in our targeted transition to a net zero carbon economy.
For a successful ESG rating, the financial services industry requires consistency, transparency and trust. So just as the private City livery guilds of old “hallmarked” the quality of goods within their trade, the “green mark” of the London Stock Exchange (LSE) for listed companies meeting its standards, is a laudable example of a step in the right direction.
Each sector should come together to produce its own bespoke ESG standards. But the need for one overarching voice is vital. Thus, there is a post-Brexit opportunity for the UK government to take an international lead in partnership with the City commercial sectors to set up a robust but proportionate ESG commission that could oversee and approve any sector-specific ESG standard-setters.
Gregory Jones QC
Alderman, Ward of Farringdon Without London EC2, UK