Every UK government since the 1990s has claimed that sustainability is at the heart of its planning policy, but the problems of ‘greenwashing’ persist in the industry. On the contrary, the environmental, social and governance challenge for the financial sectors is even greater (“ESG ratings face scrutiny in the fight against greenwashing”, Report, May 28).
First, the sectors are relatively late to the party. Tight deadlines increase the risk of bad decisions. Second, the scope of ESG is broad; embracing broad social, governance and environmental issues that can often clash, certainly in the short term.
Finally, it is complex. Adrienne Klasa’s article quotes people surprised to see oil and gas in an “ESG best in class” portfolio. But the use of fossil fuels is recognized as a key part of our targeted transition to a net-zero carbon economy.
For a successful ESG rating, the financial services industry requires consistency, transparency and trust. So, just as the private city livery guilds of old “marked” the quality of goods in their trade, the London Stock Exchange’s (LSE) “green mark” for listed companies meeting its standards, is a commendable example of a step in the right direction.
Each sector should come together to produce its own tailor-made ESG standards. But the need for one global voice is vital. Thus, there is a post-Brexit opportunity for the UK government to take international leadership in partnership with the city’s business sectors to set up a strong but proportionate ESG commission that could oversee and approve all sector-specific ESG standard setters. .
Gregory Jones QC
Alderman, Ward of Farringdon Without London EC2, United Kingdom