The increasing demand for responsible and ethical investment has led to the emergence of the term ESG (Environmental, Social, and Governance), but its broad umbrella term has caused confusion among investors.

As the demand for responsible and ethical investment grows, some investors have started to abandon the term altogether, according to Nanuk Asset Management.

The ESG framework encompasses a wide range of strategies, including negative screening, impact investing, sustainable investing, and more. However, the term has become overloaded, leading to confusion among investors.

• Confusion around the term has prompted some Australians to abandon it altogether.
• Some investors view the term as a catch-all for various approaches, rather than a specific strategy.
• The ESG acronym has become overloaded, with different meanings for different people.

Nanuk Asset Management’s senior business development manager, Mark Jordan, spoke on a recent IMAP webinar about the issue.

“…the argument here is not against ESG practices, but against using the term to describe a range of different investing approaches. We think it’s caused confusion and misunderstanding when clients or advisers are looking at different investment options that align with objectives,” Jordan said.