INVESTMENT OUTLOOK FOR 2023 - 18 - • Fees aren’t the issue. Some critics say the industry uses ESG as an excuse to charge more. While this may be the case for some passive funds and their ESG equivalents, the data does not support this claim for the bulk of actively managed ESG funds. For the most part, ESG funds are priced similarly to equivalent standard funds. • ESG is more than just emissions. While climate change can be seen as the most important global systemic risk, it is not the only one. For instance, if we succeed in cutting emissions, but exacerbate inequality, we will be trading one systemic risk for another. The ability to generate sustainable returns relies on a healthy planet and population Necessary step to sustainable finance Before ESG, there was Socially Responsible Investing. SRI was dedicated to the creation of a just and sustainable economic system. With the advent of the PRI, the focus shifted to ESG factors. This stripped away notions of responsibility and irresponsibility to focus on the bottom line and the financial risks and rewards of accounting for these factors. The success of the ESG movement has set the table for broader discussions on the future of sustainable finance. We are coming full circle, moving away from a pure financial focus on integrating ESG factors towards recognising that investors have real impact on the world – and that their ability to generate sustainable returns relies on a healthy planet and population. More than 270 asset managers with some USD 61 trillion in assets under management have now committed to net zero portfolio 2 emissions by 2050 by signing the Net Zero Asset Managers initiative. Without the efforts of the PRI and other industry groups, we would not now see ESG issues on the agendas in most boardrooms and policy action being taken to address ESG transparency and encourage investment in sustainability solutions. We also see that the world has not made the required progress towards a low- carbon, environmentally sustainable and inclusive economy that we collectively require to ensure long-term returns. This means there is more to do. The astounding growth of the ‘ESG industry’ has forced a long overdue discussion on the intersection between societal well-being and investment. What was old is new again, and hopefully, just in time. 2. Net Zero Asset Managers initiative publishes initial targets for 43 signatories as the number of asset managers committing to net zero grows to 273 – The Net Zero Asset Managers initiative