If you had to come up with a snappy title for your topic,
what would it be?
You could call it Conscious Capitalism.
The so-called ESG, environmental social governance space,
is exploding in scale.
It's currently reckoned to be worth more than $31tn, $32tn,
which is dramatically higher than it was a decade ago.
Increasingly, boards and executives are realising they
cannot afford to ignore what they used to call
"externalities," i.e.
issues like climate change, social factors
like income inequality, and a whole range
of governance questions.
Companies and big investment groups
are saying, actually, what we're interested in is making
sure we avoid harm to ourselves, either reputational harm
or actual asset value harm in the sense
that the value of our assets in our portfolio falls say,
due to climate change.
Secondly, you got a change underway
in the financial markets where increasingly investors
are saying: we want more than just profits.
And thirdly, policymakers around the world from city governments
all the way up to national governments and multilateral
organisations like the United Nations are saying we
can't rely on taxpayers' money, public sector finance,
to fund our development projects.
We need to reach out to the private sector, too.
Some companies can see that's actually
good business opportunities in the whole ESG
responsible business space.
There is such a wealth of demand from investors
for green products that actually demand outstrips supply.
That may not last, but right now it shows that companies are not
being penalised for being green.
Typically, whenever you see innovation in finance
you get a flurry of innovation at a grassroots and lots
of little experiments all over the place that pop up
in a very fragmented way.
But then, over time, the industry grows up and you begin
to get more clear cut structures for framing this new asset
class, labelling it, auditing it,
and actually imposing more transparency and consistency.
Inevitably, some people might say
the whole thing is full of green-washing and hypocrisy
and it's ridiculous.
However, no one shouldn't lose sight of the fundamental point
that some investors are seeking to use their money
to try and do good and to think about the consequences of where
their money is going.
And that is a very good thing indeed.