Finance firms’ claim to be ‘saving the world’ was a mistake, says City veteran | Financial sector

Pension funds and institutional investors have made an “enormous error” and exaggerated their role in environmental, social and government problems (ESG) to promote their products, said outgoing president of the Aberdeen group Douglas Flint, said.

Flint, who presided over the funder recently renamed since 2019, said that “ridiculously extravagant complaints” had been made by certain companies, which were motivated by a state of mind that their work was not really involved in investing money: we are only good people and that we save the world “.

Flint, who also chaired HSBC between 2010 and 2017, said City of London Net Zero on Monday that these complaints may have been overexpressed, in a way that put them at legal risk, especially in the United States.

“Our industry then made a kind of enormous error. It has become a marketing thing: let’s tell everyone that we save the world, we save the planet,” he said in the comments reported by The Financial Times.

Legal risks has increased in recent months after a serious drop in support for ESG problems in the United States. Right -wing activists and politicians have targeted financial companies for supporting climatic policies, having been embraced by political decision -makers of the Trump administration, which has put pressure on the resurgence of oil and gas production.

The ESG backlash has frightened certain companies, fearing that they are targeted by prosecution and a blacklist that could harm their American activities. Even before Trump took office in November, Texas added Natwest to a growing list of companies accused of boycotting its petroleum industry, in a decision that threatened British bank activities with the US state.

For others, the ESG backlash has eliminated international green initiatives which, according to some bosses, make their businesses less competitive. High -level investors, including Blackrock and State Street, have canceled membership of voluntary diets such as the Climate Action 100+ group in recent months.

Although American companies have brought the charge in the abolition of ESG commitments, there are increasing fears that British investors can follow suit, which means that there will be less pressure on listed companies, which they hold the shares, to reduce their carbon footprints.

This could be aggravated by a potential element of the commitment of the Labor Party manifesto to ensure that FTSE 100 companies – as well as banks, asset managers, insurers and city pension funds – adopt “credible” climate plans in accordance with the commitment of the Paris Agreement to limit the increase in global temperatures to 1.5C.

Last week, a consultation on these rules showed that the government explored less rigorous rules in the context of a desire to reduce administrative and compliance formalities. One of the options taken into account to note that the government “will not require that an entity has a discreet transition plan or to set climatic objectives in accordance with a particular climate objective”.

“The emphasis is placed on the impact of the environment and the climate on commercial profits, and not on the impact of business on the planet,” said Mark Cliff, a guest scholarship holder to the Global Systems Institute, University of Exeter. “Given the lack of clarity on the government’s climate plans, not to mention the backtracking in the United States and elsewhere, this will likely lead to a decline in corporate commitments to climate action.”

Last week, a spokesperson for the Department for Energy Security and Net Zero said that the government was “determined to make the United Kingdom the capital of the world in sustainable finance in the world.

“The consultation that we have launched seeks opinions on stakeholders on a range of approaches to transition plans, including climate alignment, within the framework of our commitment to advance the commitment of the manifesto.”