Changing consumer attitudes must pay a bigger part in the planning of investors and corporates, to ensure they don’t lose out from heightened awareness of sustainability issues.
That’s the warning from Hermes Investment Management’s chief executive officer, Saker Nusseibeh, in his latest news update, in which he said that changes to consumer demand are beginning to affect the corporate bottom line as consumers become wise to ESG issues.
Nusseibeh said that charting this change is more difficult than tracking the potential of stranded assets in fossil fuel intensive industries, but warned that it warrants a much closer look from investors.
“What is less easy, is the ability to model the business impact of a revolution in customer demand, taste and consumption,” he said. “Not enough attention is being paid to how significant this shift will be, not just to global retailers, but their entire supply chains too.
“Conversely, if we as a society took the decision to change our defined contribution pension defaults to sustainable investments, it would have a far more significant impact over the long-term than any of the government’s efforts, which can at times seem half-hearted or late to the game.”
The Hermes CEO – a long-time advocate of the financial benefits of responsible investing techniques – noted that the UK government has recognised the changing attitudes in society by incorporating these views into its policy discussions and legislation, but said further measures could be even more significant.
He added: “Whilst the UK government has already taxed plastic carrier bags, with a coffee cup levy seemingly not far away, if it was to react to the IPCC’s call and begin enacting laws aimed at preventing the advance of manmade climate change, it would have huge ramifications on thousands of companies – and their shareholders.”
“The IPCC paper recommends cutting consumption of meat – how would that impact fast food chains and their suppliers? What about the environmental cost of producing cheap cotton and other fabrics? How would that hit short-term fashion retailers?”