Tariq Fancy was responsible for implementing ESG strategies across the asset manager's portfolio but is doubtful of it hitting the target
A former executive at BlackRock, who led the asset manager’s ESG strategy, believes that there is a fundamental flaw in sustainable investing.
Tariq Fancy says that, in terms of cutting off investment in polluting companies by only backing greener firms, it will not work because “the market is the market.”
Speaking to The Guardian newspaper, Fancy says that business is not invested in the green agenda as much as we might like to think, not because they are bad people but because they exist to make profits.
Fancy now runs the Toronto-based non-profit digital learning firm Rumie and says there is plenty of green-washing happening because it can be the cheaper option to say you are green rather than boosting sustainability.
He believes that without penalties, such as carbon taxes, there is little incentive for companies to genuinely transition to green if it will negatively impact their profits.
But surely if investors pull their money out of polluting businesses, those businesses can’t survive?
No, Fancy says. Because in a free market there will always be those who will invest in polluting firms. So, investors who divest stock in these firms are simply giving up ownership of them, not necessarily forcing change.
BlackRock rejection
In a statement to The Guardian, BlackRock rejects the notion that sustainable investing doesn’t work: “Sustainable investing can deliver strong investment returns while also helping to address urgent social and environmental concerns.”
Fancy is concerned that the cost of putting ESG at the heart of a business is too high and the incentives are too short term.
However, Canada is about to see a surge in lending linked to sustainability according to CIBC.
Eric Metivier, a managing director and head of corporate banking for Canada, says that the push forward for the national carbon tax and other regulatory measures, will drive these products.
“You’ll see support for this product in virtually every sector going forward,” he told Bloomberg. “This is the beginning of the story for sustainability-linked lending in Canada.”
The full Guardian article is at: https://www.theguardian.com/business/2021/mar/30/tariq-fancy-environmentally-friendly-green-investing
