In the News

Patrick Sheehan published in Today’s Financial Times, on measuring impact

Patrick Sheehan published in Today’s Financial Times, on measuring impact

 

ESG data can be a distraction

 

Sir, Patrick Odier writes that it is “relatively easy to isolate and report on the beneficial impact of a few dozen private equity stakes in modest social enterprises, or specific Green Bond-financed projects” (“Shortage of data is the biggest hazard in ‘green investing’ ”, Insight, March 7). If only that were so. My own firm’s raison d'être is to create sustainability through innovation. We do so by investing private capital in businesses of modest size, though great prospects. The current environmental, social and governance (ESG) footprint of these fast-growing, innovative companies is often insignificant; a distraction even. So, compiling detailed ESG data on them is often a burden that misses the point. The impact of these companies is potentially huge and positive — but it is in the future and it is usually hard to quantify. The reporting industry that has sprung up around ESG of course has its place, but it should not be confused with the job of investing to make big positive impact. Investing to really change the world for the better remains very much a process of judgment and subjective assessment, often with limited meaningful data.

 

 

Patrick Sheehan

Managing Partner

ETF Partners

 

 

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