Anderson: ESG frameworks are profoundly damaging

ESG frameworks lack standardization

Currently, the lack of standardized reporting formats, transparent reporting guidelines and comparable data prevents a comprehensive analysis of sustainability reports.

Sustainability reporting is therefore becoming increasingly important in the management of ESG issues. It shows investors and other stakeholders how well sustainability factors are managed in an organization and gives them information about opportunities and threats caused by environmental, social and governance (ESG) issues and how they are managed by the organization.

Sustainability reports are not just statistics for the numbers of ESG issues in companies around the world. While environmental, social and governance factors currently only play a limited role in the assessment of companies, their importance is increasing due to regulatory requirements and investors demanding more information on these aspects for investment decisions.

The outgoing manager of the Scottish Mortgage Investment Trust has said ESG frameworks are “ill thought through” and “profoundly damaging” to any attempts to change companies for the better. Writing in Baillie Gifford’s Trust magazine, James Anderson, joint manager of Scottish Mortgage Investment Trust, said these frameworks are not just gestures or “ill-thought through metrics and distractions, “…in aggregate they are profoundly damaging to the prospect of changing the corporate sector – even the world – for the better.

“If we believe, demand and enforce a standard template for all companies, in all industries and in all countries then we will have an arid, unimaginative, fearful and rule book-driven world,” he added.

“Morality cannot be outsourced…True long-term impact for the good of economies, societies and the earth cannot be anchored in the diktats and banal mismeasurements of the ESG dogmatists, who have come to enjoy such unjustified influence.”

He added the number of companies that possess the ability to change the world for “what we trust is the better” was very small, with an even smaller subset of those driving investment performance.

“To repeat and conclude: what we desperately need is the courage to find our own less travelled paths to investment and societal progress, not the supine adherence to questionable and superficial metrics determined by others.”

The Scottish Mortgage Investment Trust is a publicly traded investment trust. It searches for strong firms with above-average return in various areas of the world. Baillie Gifford & Co Limited, an Edinburgh-based investment management partnership, runs Scottish Mortgage.

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Anderson: ESG frameworks are profoundly damaging

ESG: The New Way of Doing Business in Edinburgh, UK

Business and organizational sustainability is a complex issue in Edinburgh, with many stakeholders and perspectives. It’s also an area where the stakes are high – if we don’t get it right, there will be dire consequences for our communities and the planet.

The good news is that more investors are taking notice of ESG issues when they invest in Edinburgh companies and organizations. In fact, over the past decade institutional investors have been increasingly incorporating Environmental, Social and Governance factors into their investment decisions. And soon it will be impossible to win any RFP’s without it.

We want everyone (not just big institutions in Edinburgh) to be able to incorporate ESG-related risk into their actions because Companies that don’t adapt to these changes will not survive. This change has many companies in Edinburgh scrambling to figure out how they can stay competitive and be profitable while also contributing to a better future.

ESG The Report is one solution that helps businesses in Edinburgh find their niche in this new landscape by providing information on risks and opportunities related to environmental, social and governance factors affecting them today. Our report offers insights into what investors are looking for from companies in Edinburgh and around the globe.

ESG Frameworks provide investors with insight into how companies are performing in terms of corporate governance, social issues, labour standards and environmental impact. Ask about our ESG Frameworks package to help you get started on making your company, department or organization diverse, equitable and inclusive for all stakeholders.