Have you ever met anyone who claims they were there when the term ESG was coined? The official story is that it first appeared in the United Nations Global Compact report titled “Who Cares Wins” published in 2004. This publication followed a gathering of major financial institutions under the auspices of then UN Secretary General Kofi Annan. There must have been quite a lot of people there, and yes, I have met several of them.
Now times are hard for the poor acronym, we have already reported several times. I even confessed back in December that I felt it would be ok to kill the term entirely as long as we continue to care about more than just short-term profits when we invest. And by “we” I mean the responsible society I (perhaps foolishly) hope we live in. I have been waiting for a new term to take the place of these three letters, curious to find out what the Trumpian-era newspeak was going to allow.
This month, a new investment term is indeed claiming its place within the sustainability-related investment jargon but is this cause for celebration?
I heard it first from a US-based sustainability specialist at a recent event. “Resilience!” she said. “I bet you all of our presentations will have this term in prime position by the end of the year.” And now I can’t avoid this word. It is everywhere I look! The Wall Street Journal published the headline “Don’t Call It ESG, Call It Resilience” on February 28 this year, quoting a asset management product officer saying “Resilience is the bingo buzzword of the day.” Forbes was even faster in pointing out this new trend in an article titled “Sustainability to Resilience: Adapt ESG Strategies In A Changing World” already in December 2024.
I thought ‘Resilience’ was what you went for when you were already under threat, not when you were building a strategy that is sustainable. The dictionary defines it as “the ability to recover quickly from illness, change or misfortune; buoyancy”. In fact, already back in 2021, the World Economic Forum published an article arguing that “ESG is missing a metric: R for resilience” suggesting that one is not a replacement for the other, but rather a necessary complement. Our own Future Surfer argued the Civil Preparedness is an interesting new angle to add to sustainable investing, not exactly a replacement.
Clearly this name change isn’t a fitting one. But then again, a name is just a name. What matters is what happens in the back. If ‘resilience’ is just a euphemism, a way for climate investments and sustainability-related conversations to continue between sensible investors and companies, then why not? On the other hand, what if it becomes a prescient and subtle shift that leads us astray against our better judgement? What if, by accepting this new jargon, we implicitly give up on trying to prevent further climate change and nature loss?
This is a crucial time for institutional investors. They need to remain vigilant! The Danish AkademikerPension has voted with its wallet this week, by terminating a mandate on grounds of ESG insufficiency, following a similar move by a UK pension earlier this month. Now that ESMA rules regarding fund names is entering into force, asset managers will follow BlackRock in their re-naming spree. Let’s just say that I wouldn’t be surprised if ‘Resilience’ labelled funds will become more common. Before the regulators curb this new found enthusiasm, let’s try and check the contents of the can before buying. But at least we will be able to say we were there when RESILIENCE was adopted.
