“We fundamentally reject the argument that ESG is not materially impactful,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets. Ceres is a nonprofit organization for investors concerned with sustainability and other ESG issues.
“There is lots of data that shows” ESG is material, he said in an interview. “There is also data that shows that companies that address these issues over the long term do better financially. Because they think about these constituencies.”
While Rothstein said not every ESG issue has the same level of materiality, investors’ sentiment shows physical and transitional risks from climate change and other topics will have an impact on the returns of their portfolios. State and federal officials who choose to exclude or ignore ESG factors may put pension funds and investments of Americans’ money at risk.
“I wouldn’t put this in the context of being supportive of ESG. It’s supportive of their fiduciary responsibility to look at the range of financial risks,” Rothstein said. “As someone had said three years ago, is the pandemic an ESG issue? Is it a public health issue? Or is it a financial risk issue? Well, it’s all of them. And I don’t think anyone would argue the pandemic hasn’t had a dramatic impact on our economy, in lots and lots of ways.”
Bryan McGannon, director of policy and programs at US SIF: The Forum for Sustainable and Responsible Investment, echoed similar sentiments that some states’ pension plans may be misguided by blatantly ignoring certain ESG factors. US SIF is composed of advisers, firms and banks that support sustainable investing.
