Hello and thank you for taking the time to read Funds Europe’s third special ESG report. Since 2018 we have been following the rise of ESG with a mixture of hope and increasing momentum and charted its journey. Gone are the days of convincing people that ESG is more than a nice to have, or that there is no trade-off between this approach and financial returns. Today it’s about tackling the challenges head on. While the climate crisis is still the biggest theme and threat to our planet, the Covid-19 pandemic has fast-tracked conversations that might have taken years to the here and now. 

Investors are warning companies to treat their employees fairly, asset owners are eyeing a one-time opportunity to build a global economy that is fit-for-purpose and the direction of travel for capitalism post-Covid are all very real. There is no denying that this was unthinkable this time last year, but large gaps remain and these need attention and action now. 

The fashion industry is the world’s second-most polluting industry and is on course to use a quarter of the world’s carbon budget by 2050 if nothing changes . Is this an acceptable price to pay to look good? The good news is there is opportunity to change this and to make money sustainably. 

What we need is to set achievable goals within a limited timeframe. Gunther Schiendl, the CIO of Austria’s largest pension fund, puts it best. “We could say our investment portfolios will be climate-neutral by 2050,” he said. “That is so unambitious and easy to say because by that time, I will have been in retirement for 15 years, so this is nonsense.” 

I hope this issue can serve to advance the conversation and, importantly, accelerate true additionality. 

Romil Patel, ESG editor

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