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First quarter ESG report: Open and honest communication is key

SKAGEN Global Market Update May 2022 ENG.pdf

 

I respect people who stand for elected office. This is not because I necessarily admire them, nor because I share their political views; it is rather because it is a job that needs doing and I am not inclined to do it, despite having been a public servant for much of my working life. Such a position does not prevent me from offering unsolicited advice to or criticism of our elected leaders, however. And right now, despite the welcome European unity towards Ukraine and condemnation of Russia, I am disappointed at the evident short-termism and opportunism of many politicians around the globe.

The current energy price shock is a clear example of this. The hard-pressed consumer is being punished for the hubris of political leaders across Europe who regarded energy markets as a surplus commodity that could be taken for granted; it could not, the conflict in Ukraine has put paid to that. Ongoing events – aside from the tragedy they represent to the good people of Ukraine – are a painful reminder that energy is first and foremost a matter of society, stability and security, and its absence brings insecurity and instability. Securing society is a fundamental duty of government and such priorities must inform long-term energy and sustainability strategies, especially when governments rightly seek to execute the vital green transition. These processes are challenging and complex. They cannot be allowed to become an exercise in virtue signalling – as has too often been the case.

Politicians are not alone in being guilty of short-termism and opportunism. So it is sometimes with active engagement on ESG matters. Too often, in corporate actions and at company AGMs, we hear loud public demands from self-declared sustainability leaders that, for example, company X needs to implement a sustainability policy. And very often we oppose these calls. Why? Because company X already has a sustainability policy – perhaps even one that we have helped them to prepare. A fact that should have been known to those seeking to virtue signal had they bothered to look. Any half-decent sustainability policy must be based upon hard work and thorough analysis if it is to be both credible and coherent. Marketing straplines, no matter how compelling, are not an end in themselves. Investors need to look beyond the advertising and the spin if they are to even begin to make the changes they are seeking. You can read more about our active engagement efforts and reflections on AGMs from page 5 of the Q1 ESG Report.

We continue to put our clients first in SKAGEN. If our clients are at the centre of everything we do, then open and honest communication must be a fundamental way of working. And in sustainability matters, the truth is rarely a marketing strapline; it is rather steady, incremental efforts to improve practical matters and secure outcomes.

This is the SKAGEN fiduciary promise and our First Quarter ESG Report seeks to capture some of that activity so that our clients can accurately judge if we are meeting their expectations when it comes to promoting more sustainable business practices and the green transition. This is why we take the time to write and publish it. I hope you find it of value.

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