They say the two things one should never see made are law and sausages. To that, cynics might sometimes add journalism.
At the risk of opening up the magic box just a tad, one of the ways that a CEO – or more specifically, the people around a CEO – might be persuaded to do a full-blown interview is for us pesky journalists to promise a softball question amongst the difficult ones.
About three years ago we hit on a seemingly foolproof strategy: we agreed to ask about the City’s three favourite letters: ESG.
Some of the guff we received in those answers was barely printable, so it often never made it to our humble pages. CEOs talked up their latest strategic plan; they pointed to new initiatives, steering groups, talking shops.
Lo and behold a few years later and the market, as it always does, has found out those who just talked a good game rather than walked one.
The best way to ensure that capital (in theory) invested sustainably is actually providing genuine benefit is for there to be proper scrutiny. If fund managers, like those CEOs, cannot explain what is happening when the rubber hits the road, then more fool them if they think the market won’t suss them out eventually.
At the time of the ESG craze, of course, it was heresy to question it. Now the mood has turned; it is amazing what an everything-but-technical recession does to the City’s attitude towards cash generation.
The good news is that whilst the bubble may have burst for now, the strongest – those genuinely delivering good returns for shareholders whilst making the planet a better place – will survive.
Fingers crossed the sunlight shone on the weaker ESG performers will prove an effective disinfectant across the board.