Sustainable investments, stop the moral climate discourse

Efficiency, security, growth. This, according to John Kerry, former US Secretary of State, now co-executive chair of Galvanize Capital, is the new key to understanding the acronym ESG (Environmental, Social, Governance). No longer a tarnished label that has become divisive and politicised especially in the United States, but three simple, concrete words capable of restoring confidence in sustainable investments. "We need to redefine the narrative," comments Kerry. The moral discourse on climate remains important, but it is not enough. If we want sustainability to be credible again, we have to link it to real impacts: on business costs, on insurance, on the health of communities. The transition must be based on solid economic foundations, not just on philanthropy or concessional financing'.

His recipe is pragmatic: cut fossil fuels, accelerate electrification and make renewables the pillar of industrial competitiveness. Kerry, speaking as keynote speaker at the panel discussion "How to rebuild trust in sustainable investment", sponsored by the Lombard Odier group, also emphasises new risks: "Artificial intelligence and data centres are greatly increasing demand for electricity. If it is met with new gas infrastructure, we will be locked into decades of emissions. Speed will also be decisive. In business, getting to market quickly is essential. In energy, speed to clean will define leadership. No responsible leader can ignore the risks that climate disasters pose to assets, supply chains or long-term competitiveness'.

Concrete responsibility is the key for Kerry: 'What drives action is materiality - jobs, income, health, security. Climate is also a health issue: pandemics, air quality, community resilience are linked. And it is a security issue, both global and local. Energy independence depends on using what we already have in abundance, the sun'.

An appeal for concreteness taken up by Hubert Keller, senior managing partner Lombard Odier Group. The challenge today is threefold: "o Limited supply of core multi-asset strategies, disappointing performance in some areas and too much methodological confusion on EGMs". But signs of transformation are already evident: 'Renewables and regenerative agriculture have already proven to deliver better economies. Ai and data will become the backbone of new economic systems. As investors, it is a fiduciary duty to understand and ride these transformations. Next big opportunity: nature, especially food systems and regenerative supply chains'.

Cara Williams, senior partner and global head of climate & sustainability Mercer, also emphasises the urgency of clarifying the rules of the game: 'Sustainability has been misinterpreted and miscommunicated. It does not mean exclusion, but consideration of environmental, social and governance risks. Ignoring them is irresponsible and contrary to fiduciary duty'. If generalist ESG funds are falling behind, he emphasises, thematic funds are holding out and impact investing is growing, especially in private markets. But geopolitics is likely to weigh in: 'There is a danger that the global South will be neglected, while China is already seizing opportunities. Blended finance will be the key tool to reduce risks and catalyse capital towards these areas'.