Lobby group Net Zero Watch has warned that environmental, societal, and governance (ESG) is unlikely to survive in its current form.
They told Money Marketing that ESG has become an investment risk as a result of the energy crisis.
A spokesperson for Net Zero Watch said: “Most fund managers who have been betting on the ESG agenda are losing billions of their clients’ investment as a result of the deepening energy crisis while those who are energy realists will make billions. [bold, links added]
“The green and ESG agenda has become a huge investment risk and is unlikely to survive in its current form.”
Analyst and former fund manager Peter Cameron shares similar views.
He told Money Marketing: “A number of utility companies are planning to reopen coal plants to help lessen the reliance on Russian gas.
“Many investors have made net-zero pledges and committed to no longer funding coal, but that was before Russia invaded Ukraine.
“The situation has now changed, and I think fund managers will have to temporarily suspend their ESG/climate pledges in order to tackle the more pressing threat that is Russian aggression.”
Energy secretary Kwasi Kwarteng recently requested Drax power station in North Yorkshire to delay the closure of its coal-fired generators.
The coal plants were scheduled to shut in September but will remain available “if needed” until the end of March.
Fears over the security of Russian gas supplies have led Kwarteng to take this decision he called a “sensible precaution”.
The two houses of parliament in Germany have also voted on emergency legislation to reactivate coal-fired power plants for similar reasons.
Cameron added: “There has been a big debate within the ESG community over whether defense companies should now be investable.
“For decades, they were considered no-go areas for ESG funds, but some people are now making the case that defense is important for preserving democracy and human rights and should therefore be included in ESG.
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It’s actionable not to do the best for your shareholders. So green investors should start shorting.