In this year’s summer series on PA Future, we have asked junior members of ESG/sustainability teams to answer our questions on career paths, red flags and personal passions, to showcase the ‘Next Generation‘ of talent coming through.
Candidates needed to be a member of a fund management, ESG/sustainability or stewardship/engagement team with less than five years’ experience.
Here, Alysha Goddard, investment analyst at Adam & Company, discusses how the snowball effect of the ESG movement led to prolific greenwashing, and now ESG investing is much more nuanced.
How did you start your career and what led you to focus on ESG and sustainability? Is this a personal passion?
It was great to get into the industry at the time when the drive for more sustainable investing was picking up speed. Adam & Company had been thinking about sustainable investment strategies long before it became a trend, so it was already embedded in our research thesis when I joined. But it was fascinating to witness the snowball effect of the movement.
The downside was that greenwashing became prolific, which has been problematic because it’s discredited sustainable investing in the eyes of a lot of investors.
What has it been like for you in the last few years where appetite has waned and we have experienced anti ESG backlash in some areas?
The last few years have been interesting from an ESG perspective. The pandemic saw ESG indices performing extremely well, which was followed by the invasion of Ukraine, when defence companies and oil and gas giants benefitted. There was a backlash, which led to major underperformance for many funds in the space.
In the last few years, sustainable investing has become much more nuanced – it’s not as black and white – and ultimately, the extent to which a client’s portfolio incorporates sustainable elements is down to personal preference. It means the conversations with clients have moved up a level – people are much more aware of the options, these days.
And of course, it’s become much more of a political hot potato, with some of the world’s most influential people rallying against sustainable investing and it’s aims. This mas made a lot of detractors view ESG as a political issue, when it’s not.
What has been a career highlight for you?
Some of our charity clients want to adopt a sustainable investing process and we work closely with them to develop a personalised strategy for their bespoke requirements. This can be very important important for grant-giving charities who are susceptible to additional reputational risk.
In a specific example, we educated the trustees on ESG and impact investing, discussing the opportunities and risks associated with investing in a more sustainable way. It resulted in their sister organisation also adopting the same practices and we helped them do that. It’s been really rewarding to see our work having a positive impact!What is a red flag for you in terms of greenwashing? Are you happy to hold companies or individuals to account for greenwashing?
A big red flag would be when a fund changes its name but not its strategy. Another would be disengagement from SDG principles – we have seen evidence of this with some funds in the past. Of course, there has been a propensity for funds to jump on the bandwagon, so we have to be hyper aware of any signs of green washing.
In terms of engagement, we do proxy voting for companies when we want to hold them to account and make sure they are delivering on their sustainability promises for investors. Of course, there is only so much you can do – sometimes our votes have been ineffective, other times, it has made a positive impact. But we have to use the tools we have to try and make a difference. We remove funds when we suspect them of greenwashing.
Fast forward to five years from now – where would you like to be in terms of career aspirations and how do you think the industry will have evolved?
I’d love to be an investment director with Adam & Company, with a diverse book of clients from individuals and their families, to trusts and charities – with everything in between!
Where will the industry be? It will be interesting to see how the latest FCA regulation is embedded – especially looking at how companies and funds will adapt to this new, more transparent environment. We should all be working towards the sustainability targets, across all aspects of the E, S and the G; continuing to focus on helping our clients with the best solutions.
