‘Nuance and Shades of Gray’: ESG Pro Sees Debate Over What It Is
As Russia’s war roils markets, industry veteran Steve Lydenberg says socially responsible investing is littered with subtleties.
To Steve Lydenberg, who has spent almost half a century analyzing how companies impact people and the planet, decisions by socially responsible investors about whether to back businesses in autocratic nations such as Russia aren’t so cut and dried.
While condemning Russia’s invasion of Ukraine, Lydenberg said social investing is first and foremost about allocating money to companies, not countries. And what's key is the nature of those businesses— whether they’re selling things like food and medicines to the general population, or supplying key components to a military that’s enacting abuses, he said.
Socially responsible investing is rife with subtleties that make determining which sovereign states are good and bad “a problematic exercise,” Lydenberg said. “There’s no way of doing it without nuance and shades of gray,” said the 76-year-old industry pioneer.
Lydenberg’s comments come amid criticisms of funds that touted their use of environmental, social and governance data while devoting billions of dollars to Russian government bonds and companies before the country attacked Ukraine. Philippe Zaouati, who runs sustainable investor Mirova, which manages $30 billion, said ESG fund managers need to stick to democracies, and avoid autocracies. “There is no responsible investment if there is no democracy,” he said in an interview last week.