Cutting Through the Noise and Asking the Right Questions

The term ESG – Environmental, Social and Governance – has been discussed so often in our industry that it risks becoming a buzzword rather than a meaningful concept. I’ve written about this many times, but it’s worth revisiting because the conversation continues to drift away from what really matters.

The financial services industry loves trends. ESG has become one of them. That, in itself, can be dangerous.

At its core, ESG shouldn’t be a label. It should simply be good investing.

Think about it this way: would you intentionally invest in a company with weak governance, poor treatment of staff, damaging environmental practices, or questionable business ethics? Probably not. Strong governance, responsible behaviour, and forward-looking business models are hallmarks of financially sustainable companies. ESG, when stripped back, is just common-sense risk management.

But that’s only half the story.

For many people, values matter. We may have strong views on the industries we want to avoid entirely, or areas where we are comfortable with a small allocation as long as active engagement is taking place. Others may want to invest directly in companies delivering measurable positive impact.

That’s why I always pause when someone says,
“We have an ESG fund range.”
My first question is: what do you mean by ESG?

Because underneath the label, approaches vary hugely. A financial planner’s job is to understand your values, what matters to you, and what you’re comfortable supporting (or not supporting) with your money.

And if you’re offered an “ESG portfolio”, ask the questions:

• What exactly do these funds exclude?

• What do they actively invest in?

• How strong is the engagement with companies?

• Is this about avoiding harm, achieving impact, or simply improving risk management?

Transparency matters more than the acronym.

Take the FTSE4Good Index, widely regarded as an ESG benchmark. It still contains oil companies and miners. There may be defensible reasons for this – transparency, governance scoring, or engagement potential – but the point is simple: if you’re expecting a fossil-fuel-free approach, you won’t get it from a label alone.

So before you invest, ask the right questions.
Not “Is this ESG?”
But “Does this align with my goals, values and expectations?”

That’s where good financial planning begins.