The big ESG story of the week is about trust – not belief, faith or confidence in commitments, but of the abandoned IPO of a trust.
News that Liontrust had to scrap its intended IPO of its ESG trust (I trust you’re following this?) sent ripples through investors, with editorial ranging from “who killed it?” to the embarrassment caused to the scant interest shown.
The Times’ take on it was that Liontrust fell just short of it targeted £100 million from retail investors in its bid to create what would have been an investment trust to support green companies.
In a further comment piece, The Times questioned whether the ESG investment blancmange was starting to wobble. But while any attempt to shoehorn the word ‘blancmange’ into copy is of course commendable, the piece raises the important issue of the current tendency of many to label funds as ‘sustainable’ or ‘responsible’ in order to puff up their perceived value and potential.
As communicators, we know that simply sticking a word in front of something doesn’t make that word stick, reputationally-speaking. To gain trust in trusts, and particularly to gain trust in ESG-centred trusts, investors and other stakeholders are going to want to see hard evidence of the commercial proposition, regardless of the purpose of the organisation, and that the organisation is genuinely pursuing its own ESG goals.
Equally though, in building that trust, and doing so by being truthful about change, progress toward goals, and the nature of commercial opportunities, simply reporting and sharing facts may capture heads, but may not win hearts.
As the Financial Times opined, ESG investing is about emotion too. “Separating emotion and investment can only go so far before it fails to keep pace with our own reality. So, advisers need to be sure they are addressing both the emotional and investment needs of their clients with their advice, even if these are not obvious without a little digging,” it said, pointing to a need to keep pace with the mood, as well as chart change with facts.
We need to build trust in ESG credentials and achievements with truth then, but also appeal to human nature as we do so.
The ESG News Review is written by Steve Earl, a Partner at BOLDT.
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