The information age turned out to be the age of disinformation and then it became the age of climate disinformation, which is a bit more dangerous if you stop and have a look at the water levels in the Maldives or the heatwaves in Uzbekistan.
That is not a novelty either. Propaganda executed for negative, clientelistic or self-serving purposes has been around forever. Ever since Edward Bernays, Sigmund Freud’s nephew, coined the term in the 1920s, and even before.
It’s just that it has gotten a bit out of hand. Once again Bernays, the aforementioned nephew, is a legendary pioneer in the public relations field who wrote: “We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of."
How right he was.
One hundred years later, the problem is that everything is mixed up. Companies that were historically champions of the fossil fuel industry now present themselves totally green, environmentally friendly and very politically correct; and while most of us experience cold in summer and heat in winter, many mostly don’t buy climate change. Which is simply stupid.
While we two do not know exactly the intricacies of what causes the ozone layer hole, and we believe that governments should listen to scientists, we know that investments, when made with a sustainability perspective in mind, yield better results.
After years involved in the environmental factors of the economy, we have reached the conclusion that it is essential to ensure absolute transparency on the way that companies – especially those that have the most effect on the physical appearance of the earth – make the problem worse or better.
In recent years, investor relations practitioners and fund managers (such as us) around the world have started a race to incorporate ESG (environmental, social, governance) reporting into the communication we make about listed companies in the financial markets.
Fundamental market institutions, such as Nasdaq or the London Stock Exchange or platforms such as Clarity, have been key to explain that sustainable investments that improve the planet are also straightforward ways of profitability.
Sustainable investments are also straightforward ways of profitablity- Ramón Pedrosa and Pablo Cano
Since both of us started working in promoting the first ESG fund in Spain, we have been champions of developing new and better ways to convey to the market that sustainable investment strategies matter and work.
Investment funds around the world require companies to respect ESG criteria and to tell them about it. That in their investor relations, they are clear, transparent about what they tell the markets because, among other things, they know that the markets will respond.
Norges Bank, Norway’s Central Bank, only invests in those companies that are clear in their ESG reporting and follow a rule many of us call sustainable investment, and support the recommendations of the Task Force on climate-related Financial Disclosures set up by the G20’s Financial Stability Board.
They have a €180,275,641,266 market value, give or take, and they exclude companies that generate coal-based energy or have unacceptable greenhouse gas emissions.
Just imagine their global influence. That is why it is surprising that the House Oversight Committee of the US Congress, as the New York Times puts it, has “widened its probe into the oil and gas industry’s role in spreading disinformation about the role of fossil fuels in causing global warming”; that this committee at least suspects that large energy companies are investigating internal documents “related to the companies’ and groups’ efforts to undermine climate policy,” as quoted in the American newspaper.
Climate change affects us as fathers and mothers, as those of us who have to leave a better world to the next generations. And considering that in Almaty it is 37⁰C when in Sicily it may be 12, maybe it is worth starting to realise that we are close to a significant problem.
This scenario is affecting investors around the world. Capitalism and capital markets have been a positive force around the world. They have driven innovation, development, efforts to improve technology, medicine or transport. And when they have done well, they have generated returns for their shareholders.
Companies need to incorporate ESG information and environmental and social policies as a matter of course that can be communicated in an understandable way to investors to make their decisions.
To do this, investor relations specialists, financial communicators, media colleagues, and company boards of directors themselves need to be serious, firm, knowledgeable and listen to the scientists and the markets. Because possibly ESG-conscious investor relations will become a key ally in the betterment of our world.
Ramón Pedrosa is an investor relations consultant working from Malta and London. Pablo Cano is a CIO specialised in ESG investments, based in Madrid.