11 June 2021

Dr Sarah Ivory, Director of the Centre for Business, Climate Change and Sustainability (B-CCaS), shares her views and take-aways from the recent ESG Investment — Beyond Equities event.
A minimalist desk space

B-CCaS in association with the Chartered Financial Analyst (CFA) UK – a membership body representing 11,000 investment professionals in the UK – recently held an event in the ESG space. But rather than focusing on listed equities we wanted to look to the other asset classes that sometimes receive less attention.

There are a few important things that occurred to me while watching this event.


The first was to be proud of the diversity of the voices we heard. Such a diverse panel should be par for the course in finance-related (and any other) discussions but sadly often is not. We should celebrate it when we see it, and call it out when we do not.

Panel included:

  • David Hickey, Portfolio Manager and Responsible Investment Lead, Lothian Pension Fund (Chair)
  • Manuela Fumarola, ESG Manager for Private Markets, Aberdeen Standard Investments
  • Patty Cao, Assistant Fund Manager, Emerging Markets Debt, Jupiter Asset Management
  • Michael Eberhardt, Head of European and Global Sustainable Credit, Trading and Liquidity Strategies, BlackRock
Screenshot of the ESG Panel
From top left clockwise: David Hickey, Manuela Fumarola, Patty Cao, Michael Eberhardt

Tone of the Panel

The second was to enjoy the light-hearted (but not lightweight) tone of the Panel Chair, David Hickey. More of David later. This tone made the event less something to endure, and more something to enjoy. Why can’t more panels be like that? Answer: they can and should be!

Handling of the ESG Topic

The next was to appreciate, with the guidance of the panel, the complexity of the ESG topic in particular, but not only, in relation to the false silo-ing of issue.

Is climate change an 'Environmental' issue? Or an 'Social' issue (think fuel poverty, or communities in transition)? Or a ‘Governance’ issue? Of course, the answer is all three, but it is difficult to quickly and definitively categorise or measure the complex impacts as well as the interactions with endless other issues.

Asset Classes (Beyond Equities)

What I wanted to know most – and happily my question on this was relayed to the panel (thanks David!) – was what asset classes (beyond equities) are most important in transitioning the economy to what we need it to be?

This is where we got to the heart of the way we need to think about ESG specifically, but more importantly about the role of finance in contributing to a thriving, just, and sustainable society.

Because what I found most encouraging was what was implied by all four panellists, but not explicitly said. They said (my words) "whatever instruments and asset classes find and fund the solutions we need and make these solutions scaleable".

Not once did anyone talk about profits, returns, rewards, or upside potential. That is, they treated returns precisely how they should be treated – as the reward for the investment, not the point of it. Indeed, the discussion of 'Beyond Equity' elevated the thinking beyond finance-y types trading shares between themselves like kids in a playground, with no apparent impact on the real economy.

Is this entirely fair? Absolutely not. After all, the panel host David Hickey was part of the recent proxy vote which got two (possibly three) new climate change savvy board members elected to Exxon. But we need to remind ourselves that this active investor approach is the power of ownership – not who owns what, or whether they can use fancy reporting tricks to 'decarbonise' a portfolio that does not deserve the title of net zero.

Insightful Panelists

Along with interesting thoughts throughout, each panel member provided some gems of insight that helped clarify my thinking on these issues, and hopefully many in the audience also (all direct quote repeated with permission).

The comment that stood out from Manuela Fumarola, the (relatively new) ESG Manager for Private Markets at Aberdeen Standard Investments was that "the problem with the public markets is that if they were working on their own, they would have already funded and scaled the solutions we need to the crises we are facing. Given we are still facing a number of crises, we need to look for new solutions – and those new solutions need alternative funding to public markets, in particular in the early stages." Exactly.

Of course, Patty Cao, Assistant Fund Manager, Emerging Markets Debt, Jupiter Asset Management, reminded us with some stark statistics of where finance needs to be directed, in her view through debt markets: "over 85% of the world’s population are in emerging markets – this is where we need governments and companies working together to solve the problems they are facing."

And finally, Mike Eberhardt, Head of European and Global Sustainable Credit, Trading and Liquidity Strategies, BlackRock, reminded us also of the importance of Board composition for all companies – those financing and those financed, and irrespective of asset class, suggesting the Board "needs climate fluency across all members, not just one climate expert."

Perhaps the title of the event was a little misleading – it is not about ESG investment beyond equities, but in addition to equities. A silver lining of a complex financial system is that it should be able to be all things to all people (or companies, entrepreneurs, issues, or crises).

The key is making sure each asset class is working towards actually solving the crises not just in the real economy, but in the real society. That is, after all, how the financial industry earns the license to operate that we give it.

Dr Sarah Ivory is the Director of the Centre for Business, Climate Change and Sustainability at the University of Edinburgh Business School.