ESG Matters: ESG hits the front pages

ESG Matters bonus episode: transcript

The PDF server is offline. Please try after sometime.
  • My Documents


    Material personally selected by your relationship manager for your interest.

  • My Bookmarks


    Access all of the content that you have previously selected to bookmark.

  • Get started


    ​Scroll through these slides to access the personalised features of your Dashboard.

  • My Suggested Reading


    A virtual library of regularly posted insights and legal updates based on your selected preferences.

Get Started


Anna-Marie Slot: Covering ESG and mainstream media has historically been a hard sell, but in recent years there's been more and more coverage about the economic, social and governance impacts of climate change. Indeed, as climate disruption hits the economies in more ways, it is increasingly being covered as a business story. And the expectations of reporters is not only understanding, but also critically analyzing climaterelated issues that impact businesses. I'm Anna-Marie Slot, Global Sustainability Partner for Ashurst. And in today's episode, I'm speaking with Patrick Temple-West from the Financial Times. Patrick is based in New York and covers ESG in the Moral Money column of the Financial Times. Patrick writes on all aspects of, "ES," and, "G," including global energy. Patrick, welcome today, and thank you for joining us.

Patrick Temple-West: Hello, Anna-Marie, it's my pleasure. Thanks for having me.

Anna-Marie Slot: I'm keen to dive in first into your career, and in particular where your interest in ESG comes from.

Patrick Temple-West: Certainly. I started my career in Washington, DC. I was a reporter there for 11 years, graduated in 2008, and I was really blessed to get that first job that I did just before the worst of the financial crisis hit. I bounced around a bit covering a range of different beats from taxes, and then ultimately ended up covering the Securities and Exchange Commission, the whole breadth of the agency's portfolio from accounting issues to enforcement, to regulations that the agency had to write following the massive Dodd-Frank Act, the financial reform law. And it's there that I got interested in ESG really from the, "G," perspective. I mean the agency's rules governing corporate governance, proxy advisors, shareholder petitions, that's where I got interested in it and saw the opportunity that the Financial Times was launching this Moral Money column to cover ESG specifically, jumped at the opportunity to move up here to New York, to do that full time. We've been on that since 2019 and really my focus continues to be the annual general meetings, the corporate governance regulations, and sort of battles between shareholders and companies as we've transitioned now from the Trump administration to the Biden administration. It's been a remarkable shift in seeing the conversation, the tone around ESG change from something that is seen very skeptically, seen very problematically by the Trump administration, as something that is maybe just a marketing gimmick, maybe is kind of overcharging investors, to something that is a real risk mitigation tool in a way to help prevent the climate change problem. So my background has really been in the regulations, the guts of the Securities and Exchange Commissions, proxy advisor, corporate governance rules, and now have broadened that out to the, "E," and the, "S," and to sort of the emerging trends in renewable energy, hydrogen, that we see and saw explode last year.

Anna-Marie Slot: Interesting journey there so far. Lawyers and journalists together, you've got two of the best topics there could be there.

Patrick Temple-West: Yes.

Anna-Marie Slot: You do mention where ESG was marketing-speak, and you kind of referenced that just now; is that the time that you saw this conversation go from marketing-speak to being taken more seriously from the media's point of view, did it happen earlier? Maybe you could share with us?

Patrick Temple-West: Going back maybe 10 years or so, ESG was socially responsible investing, sustainable investing. The terminology has changed a little bit, and that SRI model, that's where it was seen before, that sustainable investing was done by a handful of people, it was a real niche market for people who just saw an opportunity to align their investments with their ethics. And that was really where SRI was maybe 10 years ago. Even during the Obama administration where the politics were more aligned with the ESG causes, it just wasn't discussed. And I think one of the big changes from, and going back to the media's coverage of this, was the growth of ESG ETFs, which I think really started to take off in 2014, 2015 once BlackRock came out with their ETFs it became more mainstream. And as the fees came down, as it became more accepted, aligned with that ETF product which people were already comfortable with, as more of those ESG ETFs were coming online, State Street, Vanguard, Fidelity, that's where it just became more widely accepted. On top of that, you also had the Trump administration come into office in 2016, which I think also prompted people to take a look at ways that they can do more with their money, do more with their retirement savings for human rights, for climate change, for the good of the planet. As the Trump administration was looking more skeptically at environmental regulations, at some of the other ESG causes, and also on the governance side of things going after the proxy advisors, making it harder for investors to file shareholder petitions, I think people took more of an interest in ESG as a way to put their money where their values were.

So those two totally separate areas were aligning, the reduced costs in investment products from mutual funds to ETFs, and more of an interest, more of a opportunity to align interests with investments; that's I think where the media started picking up on the ESG conversation more. I mean, you always had specialty journalism products that had been covering sustainable investing for decades. And I know, like Bloomberg, for example, had a great reporter who was covering sustainable investing for a number of years, but it was really just in the past three or four years that places like the Financial Times, places like my former employer Politico, were taking a look at the ESG conversation and dedicating reporters to covering that specifically.

Anna-Marie Slot: Interesting. And so really, it sounds like the money starts moving towards ESG, the products start appearing into the market, there's an increased focus then, there's reporting coming from companies, their shareholder interest; how did you see then the media's response, you mentioned various media outlets adding to their ESG coverage, what do you think that's looked like over the last five years?

Patrick Temple-West: Just an explosion of growth. There were times where editors just would not be interested in these stories. Shareholder proposals, for example, editors would say, "These are nonbinding proposals; even if they do win a majority of support, why are we covering this, there's no motivation for boards to change anything. These shareholder proposals, even if they're somewhat popular with investors, they never go anywhere. That has totally changed in the past couple of years. Now, on the front page of the Financial Times, you'll see Shareholders Revolt Against HSBC, or Total, or whomever the company might be, but these shareholder petitions, the investors voice on these ESG concerns is really moving companies and forcing them to act. And the media is now doing one-off stories on will a shareholder proposal proceed onto the ballot? Will it survive SEC scrutiny and move ahead for some of these companies? And that has dramatically. Before, like I said, it was editors were skeptical about why we were covering this and we wouldn't do stories. And then it becomes a self-fulfilling cycle where if you aren't doing stories about it, it doesn't really change the conversation, it doesn't really motivate boards to act. Yes, you had the NGO communities, you had these activists, human rights, climate who were pushing for changes, but they weren't able to really have that snowball effect of getting stronger and stronger support for these things, because the media attention wasn't there, and now it is. And I think they've really been able to capture that, and shake up the board conversation on these issues.

Anna-Marie Slot: Interesting. So more and more people getting involved, more and more people paying attention. In your role as a reporter covering impact investment for the Financial Times, I think something we hear discussed a lot, and be interested in your view on, is whether there's any kind of lack of clarity or disconnect between in particuar, fund managers talking about ESG and the average end investor.

Patrick Temple-West: Yes. And that's getting closer and closer all the time. Obviously, the fund managers will respond with products that they see demand for. And like I said, BlackRock I think was one of the first to have ESG ETFs. And as the fees came down... I remember even the fees for that were a little too high compared to what you would get in a traditional fund. But now, as the technology has gotten better, the fees are almost comparable with the broader index funds that they offer. I think that asset managers start marketing that and investors really started to pick up and recognize that this is a risk mitigation tool. The ESG funds have performed better. I mean, the trade last year, for example, it's a bit of a one-off and it'll change this year. But if you were short oil and gas companies in 2020, and you were long technology companies in 2020, you did amazing. There was no pandemic for you. And those are the ESG ETFs. I mean, you take a look at the top holdings. It's all Microsoft, Apple, Alphabet. And they're very underweight on oil and gas if they include those companies at all. So if you avoided those, the downtrend in oil and gas companies and were long tech, you did fantastic. So I think people are recognizing that that was really a smart play. And that's what those ESG ETFs were holding last year. So, the investors are recognizing that there is value here that has nothing to do with a morality ethics question. It's just another tool to screen risks.

Anna-Marie Slot: And I guess, changing gears a little bit, not looking from the fun side or the manager side, but looking in particular to the other side. Organizations that you speak to everyday about ESG matters, where are the pinch points for them? Particularly lots of organizations coming out now with ESG commitment, sustainability commitments.

Patrick Temple-West: Yes.

Anna-Marie Slot: So, where do you see that really hitting the road?

Patrick Temple-West: I mean, we've been looking at this just in the past couple weeks for some of our more money stuff. I mean, the banks' net zero commitments, for example. We saw Citi Group was one, Wells Fargo was another. Rolling out these net zero commitments. And this is nice. It's obviously starting a conversation, getting the banks and their employees to be thinking about this more seriously. But where are the specifics? What have you actually agreed to do? And where is that, yeah, pinch point? Exactly. I mean, are you going to stop lending financing to fossil fuel companies? Or are you a bit more vague where you're saying, "Well, we're thinking about this now, but we're worrying about it five, 10 years down the road"? Those are the types of things that we're looking at. And these banks are putting out these press releases and have pulled in calls with the media. And they definitely see an opportunity to win that green halo, as we say, for doing these sustainability commitments. But where are the specifics? And that gets into the greenwashing concern question that we're following. What are you really doing? What is the pinch point again, for this, for your commitments? Versus what are you doing to just count your company and your brand? I think that's the question, and that's really where things are going on this front into 2021 here is where is the line of greenwashing now? And obviously, that's every eye of the beholder on what that means. The companies would argue, "We are making massive changes. We've never really had these conversations before. We're doing all this internal compliance training." And then you would talk to NGOs, the activist community, the environmentalists, human rights folks. And they would say, and not that much is changing. They're definitely talking the talk, but where are the specifics for that? So, what we're looking for is more specifics. And be honest, and be transparent. If there are areas where you think, "Well, we can't just drop all of our fossil fuel oil and gas financing tomorrow." You just be open and admit that. And we talk through a game plan, if you have one, about how to get away from that. Where does it make business sense to keep continuing fossil fuel financing? Where does it make sense to know the transition to renewable energy financing? And be able to stand up to the scrutiny on that. I think that's what companies need to be thinking a little bit more about, is everybody wants to be touting and promoting the good that they're doing, but there's also more transparency, more sincerity and frank humility around what they can actually accomplish. And that would, I think, go a long way with the media is just how are they communicating that? And where are they being sincere about what they can actually accomplish and what's too hard. I mean, we understand. These are businesses. They need to report to shareholders every quarter. And it's hard for them. There's going to be pushback, but it's just being up front about that and recognizing what they can accomplish.

Anna-Marie Slot: As you mentioned, this whole area kind of new for companies. Right.

Patrick Temple-West: Yes.

Anna-Marie Slot: And it's new for banks. It's new for everybody. I mean, green bonds in the corporate form, really started expanding in 2014 with the green bond principles being put out.

Patrick Temple-West: Yes.

Anna-Marie Slot: And the equator principles and in the world of projects that goes obviously, a lot earlier. But it is a new area for people. And so I guess, from the media perspective, what do you think is the media's role in covering that? Is it to draw out this transparency? Is it to support the transition? Is it some combination of that?

Patrick Temple-West: Yeah, I think the media's role is to be skeptical of everything. The journalism cliche is that my professor has hammered into me is, "If your mother says she loves you, check it out." Or you just have to go out there and be skeptical. And get a second source for these things and not take what they're saying at face value. And like I said, look, we understand these are huge organizations with a lot of people's jobs and bonuses on the line. And this is what they've done to be successful for decades. Turning off lending for one specific area to do more renewable energy, for example, it's a really hard transition. And there's going to be pushback from internally. There's going to be people who say, "Why are we doing this?" I totally understand all of that. I think the media's role is to question. And really to question where companies are being duplicative. I mean, my colleagues, just when I was starting at the FT in 2019, just to give you one example, not to call out this company specifically, but it's just one example that comes to mind to me. Vanguard had on its website, our ESG funds, whatever it was, they're fossil fuel free. And you could just a quick search of the holdings of these funds shows that there were oil and gas companies in there. And we did a story. We asked Vanguard, "What's the deal with this?" And they had to change the language on their website and reword it. And they had to sell out of company. It was a bit of a problem for them. And it's just doing more things like that. I mean, I don't want to pick on Vanguard specifically. I'm sure there's other examples of those type of things. But was it just, they were loose with their language on the website? Somebody didn't check in terms of the marketing on the website versus what was in the funds? But it's those type of questionable greenwashing practices that we're watching out for. Green bonds is another area where, how far can you stretch what is green and still get a green bond out of it? And the incredible interest rate savings that you can get on some of these green bond deals. Is it okay if a shipping tanker company says, "Okay, we're going to issue green bonds and put solar panels on our tankers to run the motors, the electricity on the ship"? But you're still hauling oil all around the world. Your tanker business, it's hauling oil around from port to port. This is what you do. Can they issue green bonds? Is it okay if they issue green bonds? Should they be doing more a brown to green bond type of product? Those are the type of nitty-gritty areas that we want to be covering. What are the climate bond initiatives? Who are these groups that are the arbiters, checking this out, raising concerns? Raising questions about what is green, what is brown? What is on that scale transitioning from brown to green? I think that's the media's role. And also, just keeping track of the huge regulatory apparatus that is coming online with this space. And Anna-Marie, you and your colleagues have been fantastic on keeping an eye on that, keeping us, even in the media, up to speed on the regulatory process out of the EU. I mean, the rulemaking out of Brussels is, I think, multiply more complex than it is out of the US here. And my background just happens to be covering the US regulatory process, so I know it a little bit better. But it's just keeping people appraised what's coming, what's on the agenda, where what stages of these rulemakings are, is immensely helpful to our readers, and something that we need to be keeping an eye on, especially here in the US as the conversation has flipped from ESG skepticism to ESG accelerated ahead.

Anna-Marie Slot: In that vein, I think, and also, so going back to one of your earlier comments about BlackRock's ETFs in particular, as an ETF that has to track some kind of index, are there any kind of particular types of governance stories that you're focused on? It doesn't get talked about very much in ESG, but the critical component of the overall sustainability impact.

Patrick Temple-West: Oh, it's huge. I mean, the governance conversation, just in the US, is going to be a top talker for 2021. I mean, like I said, the Trump administration went after the proxy advisors, trying to diminish their influence in the asset management ecosystem. Biden folks will flip that right back, and take the heat off the proxy advisors, which have a considerable influence on ESG votes. If they recommend for a various political spending shareholder proposal, there's a good chance that that will get a lot more support than it would if the proxy advisor voted against it. We are seeing now, out of the US, more shareholder investor friendly proposals that they have lumped in with the ESG conversation. I mean, just what was it? Earlier this week, gosh, the acting head of the SEC, said universal proxy ballots is now part of the ESG conversation. This is, instead of requiring investors to vote on a single slate of directors, they can pick and choose. So if you like two that management voted in, and three, that an activist might have proposed, you can divvy up your votes, instead of voting entirely for an activist or entirely for management. That proposal, those rules had been floated in 2016, but lay dormant through the Trump administration, are now being revived. The SEC's also looking at the shareholder proposal process. Are there areas that they can tweak, rewrite the rules, to make it easier for competent investors that have a legitimate claim to get a proposal up for a vote at a company? : Are there ways to make it easier process for them? Should they make it an easier process for them? Those are the types of conversations that on the governance front, the SEC is really going to be wrestling with this year, and into 2022. Also, this year, just coming out of the pandemic, executive compensation is one that we're watching on the governance side. We saw a number of companies last year lower the goalposts during the pandemic to make it easier for executives to earn their bonuses. Some were we're doing it legitimately, in an isolated attempt, and then others were doing it [inaudible 00:23:47] longer-term executive pay packages that will make it easier for them to earn bonuses five years from now. Where are investors going to draw the line to that?

Where are they going to say, "Okay, look, you are in the restaurant business, you're an airline, you are a hotel company. Obviously, you were hammered last year. Okay, we understand that you need to compensate your high performers. We understand that we need to rewrite the pay package to compensate for that." But does it make sense to do that for a long-term compensation plan that might have, at best, for another five years? Where you have another four years to make up for sluggish performance in 2020. Where are investors going to draw the lines on that? We saw a vote at Starbucks, where it really caught me by surprise, at least, that the investors kind of turned down the executives' compensation plan at that company. And is that just a one-off? Was there just something unique to Starbucks, specifically? I mean, I haven't looked at that, how the pay was structured, but was that a sign of a trend that investors are going to be a lot more skeptical of the same pay plans, the same pay votes, this year? So I think the compensation question coming out of the pandemic is going to be crucial to the governance conversation this year.

Anna-Marie Slot: Interesting. So sounds like governance is near and dear to your heart, and that I can understand, coming out of anyone who covers the SEC for that long. Are there any other kinds of stories that you want to cover, from an ESG perspective?

Patrick Temple-West: I think that the greenwashing question is something that not just the media, but the ESG community is going to have to wrestle with. Where is that line? Like I said before, it's going to be different for different people. Can you be an oil and gas company? Can you be a more [inaudible 00:25:48] company, and issue green bonds? Can you wish you sustainability linked bonds? Who are going to be the arbiters that, and really draw the line, and say, "No, we need to keep the green bond community pure for those companies that are legitimately issuing green bonds. Because if we have all these sort of green tinged bonds out there in the market, then people are going to throw up their hands and say, 'Well, companies should have just been issuing conventional bonds.' Why are they doing this? We don't understand the product, we don't like the product anymore. We're going to move on to something else." What's the ESG 2.0 concern, that the industry is really going to have to wrestle with? It's something that we're going to be following. And just, the regulatory space, I mean, here in the US it's all SEC, all the time. I mean, they have really tried to make up for lost time over the last four years, in the ESG conversation. They must understand that this is a political issue, that resonates with voters, that definitely resonates with the asset managers, as they are rolling out new ESG products. How can the regulatory space make it more commentative for those products, just watching the SEC, and the ongoing action out of Brussels, out of the UK, on their regulatory apparatus, as well? Covering the stock exchanges, that NASDAQ proposal on board diversity was a big story for us. That is going to continue. I mean, NASDAQ really went out ahead there. We'd already been watching what was coming out of the common stock exchange on their ESG proposals, to some of the really tough rules that they implemented there. Maybe it'll be interesting to see how much of that actually sticks. Obviously Hong Kong is going through a difficult transition right now. Will they continue to really hold some of those dual listed Chinese companies, hold them to high ESG standards? It's a story that we'll be watching the rest of the year, as well. So it's a definitely interesting transition period, as we have seen the success of ESG products, the awareness to the value of these, and the increasing inexpensive quality of these ESG products, how will that continue into this next chapter for ESG? Or will ESG just become everything for everybody, and it just sort of loses its value, it loses its meaning? It doesn't really have, could bring to the table that risk mitigation component that we've seen strengthen ESG, up until this point. So I just think that's something that we're going to be interested in, and following.

Anna-Marie Slot: Yeah. Interesting point. I think that that is to what people frequently go back to. Is this kind of a flash in the pan, and something that people move off of? As you know, that if you take the step back, and look at the fundamentals behind why it's happening, maybe it doesn't go away, because there is a critical business and global imperative here that really does need to be addressed. I guess whatPatrick Temple-West: That's what I mean. Can I ask you that same question? What are you going to be following, Anna-Marie? I mean, what are you hearing from clients on these things? Where do you see the ESG conversation going over the next few months?

Anna-Marie Slot: It is accelerating, that conversation is accelerating at a pace that, I think if you'd asked anybody who had any nexus with this five years ago, they would never think that it was moving as fast as it is now.

Patrick Temple-West: Yeah.

Anna-Marie Slot: I think the key things that we're going to be working with clients around are, what we always help. Assess your risk, be very clear in what you're saying to people and backing it up, right?

Patrick Temple-West: Yes, yes.

Anna-Marie Slot: So that's something that we've always worked with our clients around, and especially in this area, right, this area, which is so new. And so much language is being used that has no universal definition. So when you say net zero, what do you mean by net zero? Are you talking GHG? Are you talking carbon? What do you mean by net? Are you talking avoided emissions? So what is it that you are saying? What is it that you mean by what you are saying? And then how are you delivering what you are saying? And I think those all three aspects of that, are areas that all of our clients are looking at. In everything they do kind of from financings, to M&A, to their employment contracts with their senior managers. And then of course, for us that also leads into the whole disputes field and risk field for all of our clients, which goes back to the first point. You need to be clear, you need to be transparent.

Patrick Temple-West: Exactly. And I think, yeah, some companies are going to make the States either intentional, or more likely unintentional in States on what they're saying and what did they put in a sustainability report that was sort of a throwaway sentence or paragraph that could come back to bite them, if it says somewhere else in another disclosure where they're doing the exact opposite. I can't think of a specific example of that, but where are they getting loose or with the language that might come back to bite them. Because not just the media, but the regulators are looking out for this. I mean, some of the statements out of the SEC, it's those sustainability reports are becoming more and more material for companies. And you can't just put the kitchen sink in those sustainability reports, as we've seen over the last few years. Now you have to be a little bit more rigorous in backing up what you're saying.

Anna-Marie Slot: Yeah. I think that's totally right. And I think also the added challenge here is that the tech around this is also just moving at light speed. So it's possible that somebody says something today that in light of today's knowledge and today's understanding. All really made sense, that they're going to be judged, three years from now on a look back. And then you have to be really clear about why you said what you said. And you're right, you have to be very clear about what you're saying in one place and what you're saying in another place. And we already see that.

And from the regulatory perspective 10 years ago, there were probably around 600 ESG rules and regulations globally. That's 2100 now in 10 years. And the EU, as you mentioned, the EU is on the front of this, the US obviously takes a much different approach in terms of how it regulates overall. But that doesn't mean it's not going to come out with guidance around where it goes. And the SEC will always consider what the disclosures are, that are out there, and whether or not investors are being adequately informed. So the regulation side is not going to be turning around anytime soon.

Patrick Temple-West: Yeah. It's what we're seeing out of Washington for now. Yeah.

Anna-Marie Slot: Yeah. So I guess, final question, now that we've talked about this kind of greenwashing and what companies can do. You've heard what I think companies should be doing. What do you think from a journalist perspective, what can companies do to ensure that their ESG message is getting clearer through the lens of media.

Patrick Temple-West: Everybody likes to think that they're the best at what they do. I mean, sports teams don't like to admit their weaknesses and companies are the same way. If you can't get all the way across the goal line and you're making commitments and you don't think you can back them up, just be a little bit more humble and a little bit more transparent about that. Talk to us, talk us through that. We'll ask skeptical questions, is the same way that the investor community will. But if you have a story that sounds legitimate and is authentic, we understand that this is a new space, this is a new conversation. Everybody's trying to figure out how this works for their particular business. I think, yeah, just being more transparent. Making sure that your language on this is tightened up and isn't kind of trending more toward a cheerleading for the company that might get into the greenwashing space. I think the media is more attuned to this and we're going to be talking to the NGO, the activist community, if they spot something and it's on the line in terms of greenwashing, we might do a story about it. So there's that reputational risk there as well. You want to be in compliance, you want to be messaging the right things, and don't exaggerate, don't over promise what you can. And like I said, we will be more receptive to that, more understanding of that. Than if you come out and say, we're going to be making all these promises, we're going to be doing all these great things without the specifics and without really the follow through. So that's what I think can get companies in trouble, not just with the critical stories in the media, but also questions from the regulators.

Anna-Marie Slot: Yeah, definitely, definitely. So it sounds like have a plan, know what your plan is, know what you're saying when you talk about your plan and engage. Well, thanks a lot Patrick, I think it's been a great session. I hope our listeners also agree.

Patrick Temple-West: Anna-Marie, thank you to you too. You've been pretty helpful, I guess, on some of these regulations out of brussels where it's just like we're sitting here thinking what's the significance of this. And you've been really on the spot about providing some quotes and context around, this is why this matters, this is what's going on here. Just to have that snap analysis is really valuable. So really appreciate the work that you're doing on this front as well.

Anna-Marie Slot: Oh, our pleasure. Thanks for listening to this special edition podcast. We hope you found it worthwhile. To learn more about the issues we've just covered, please visit If you'd like to keep track of ESGs evolution in business, keep an eye out for Moral Money, the column in the Financial Times. This special edition episode is just one small part of our continuing podcast series, ESG Matters @ Ashurst. Make sure you don't miss any of our future episodes by subscribing via Apple Podcasts, Spotify, or wherever you listen to your podcasts. While you're there, you can also listen to our other episodes and leave a rating or review. In the meantime, thanks again for listening and goodbye for now. 

All Episodes


        Forgot Password - Ashurst Account

        If you have forgotten your password, you can request a new one here.


        Forgot password? Please contact your relationship manager to find out more about our client portal.
        Ashurst Loader