Charlotte Gibson: 'Gaining a better understanding is key to overcoming ESG challenges'

Insights Hub caught up with Charlotte Gibson, Global Head of Client Management at Ninety One, to hear her top tips to improving client conversations around ESG investing.

Ninety One is a multi-capability investment management firm, offering equity, fixed income, multi-asset and sustainable funds. The founder-led company started in South Africa, in 1991, as Investec Asset Management, with a belief that it could do things differently and with a deep connection to the conservation of the environment and wildlife.

We recently sat down with Charlotte Gibson, Global Head of Client Management at the firm, to find out about the biggest obstacles facing financial advisers in the Environmental, Social and Governance (ESG) space today and how to overcome them.

What are the top challenges for advisers and clients when it comes to ESG investing?

Gaining a good understanding of the landscape is by far and away the biggest challenge. It is not helped by the fact that there’s no single definition of ESG and many funds in this universe. Funds that may be labelled ‘responsible/sustainable/impact’ funds can range from those with an explicit sustainability focus – for example, investing in companies that are helping the world tackle climate change – to those that simply exclude certain sectors.

What’s the biggest risk associated with ESG?

Climate. Without a doubt. The world is trying to shift to net-zero greenhouse gas emissions by 2050 or sooner. But achieving net zero is about much more than excluding certain countries or sectors from a portfolio. That will have no real impact on the real world. We need an inclusive transition that works for all of the planet’s 7.9 billion people. Reducing carbon is especially critical in emerging markets, as they account for more than 90% of global emissions growth. A drive to net zero that excludes any region, intentionally or otherwise, could result in no net zero at all.

What are your top tips for advisers on improving ESG conversations?

First, gain an understanding of the ESG landscape and all the funds out there. That will help you identify funds that match your client’s financial goal, which should always be the primary objective. You’ll also be able to see where a fund is making a difference and what its limitations are from an impact or ESG perspective, which will assist in conversations regarding clients’ impact and sustainability objectives.

In any conversation, it’s really important to highlight the risk and return case for investing in ESG or sustainable funds. For too long, sustainable and ESG investing has been presented as a moral choice. We think that by pursuing a ‘sustainability with substance’ investment approach, there are unprecedented opportunities to tap into new sources of growth and potential return – driven by global efforts to tackle our collective sustainability challenges – as well as to manage the investment risk arising from climate change and other ESG-related factors.

Find out more about our new EnVIRO find range and how to help your clients invest in a more sustainable future.