#1 - IFC Elevating Environmental, Social, and Governance Reporting in Emerging Markets

Guest Blog by Norman McComb Demystifying Sustainability & ESG | International Development Approved Safeguards Expert | Transforming & Futureproofing -this was originally published here

Read the IFC Elevating Environmental, Social, and Governance Reporting in Emerging Markets 

THANK YOU

I felt compelled after reading this report to revisit the genesis of ESG.

Would you believe, a significant proportion of people working within and across ESG, Sustainability and Environmental sectors, don't know the origins of “ESG”!

ESG has morphed… it penetrates all sectors and industries, far from its origins within the United Nations Environment Programme Finance Initiative (UNEP FI). Now found in the mainstream press, it’s been weaponised, and some might say, you can determine the political leaning or wokeness of people whether pro or anti-ESG.

LinkedIn is a treasure trove for inquisitive researchers, ChatGPT won’t find you this (just yet).

When I see "ESG", I’m reminded of a 2022 post by Prof Paul Q Watchman (RIP) [https://www.scottishlegal.com/articles/paul-quayle-watchman], You can find it here: https://www.linkedin.com/feed/update/urn:li:activity:6819912874769620992

Paul Watchman tagged Paul Clements-Hunt, asking:

Hi Paul,

You and your team at UNEP FI coined the acronym ESG. We used it in The Freshfields Report and it has become ubiquitous and has spawned many ESG industries and practices from investment funds to law firms. Literally, millions of people work in the ESG industry today and owe their jobs and careers to you.

Do you recall exactly when you coined the term “ESG” and the first time you saw your brain child in print?

Paul Clements-Hunt (PCH) duly obliged with a timelined response [https://www.linkedin.com/pulse/definitive-surprising-origins-esg-just-smile-paul-clements-hunt/]:

1. June 2004 (UNEP FI Copyright) we published the 1st materiality report series where the cover states:

"The Materiality of Social, Environmental and Corporate Governance Issues to Equity Pricing." That'd be SEG not ESG but by page 4 (Co-Chairs Foreword) and page 5 it's become ESG.

2. Why did it flip from early derivation GES and SEC (on the Cover of Materiality (I)) to ESG?

In June 2004, after design of the report cover, in my UNEP FI Office in Geneva there was a mental scrap over GES, SEC, or something else? In the room were the amazing UNEP FI staff, consultants, interns most in their early-mid 20s including: Scotsman Gordon Haggart; Jacob Malthouse Trevor Bowden James Gifford Philip Walker Ken Maguire.

3. Ebb & flow the conversation went over what's the best construct? Naturally it should be Governance, Environmental & Social (GES) as if a company gets its G right the others should follow.

4. GES, really? Nerdy, not so catchy, not so sexy.

5. My instinct, almost Monty Python on reflection now was this: my two sons went to Geneva English School (GES) so I did not want that; my tabloid journalist instincts told me GES was just too technocratic so get the sexy "E" upfront.

6. Critically, the "S" (human rights, supply chain, labour etc ) was the most likely to be flicked off the end by Milton Friedmanesque lobbyists. So weld S in the middle.

7. But "S" has a whiff of socialism which would ignite great swathes of lobbyists if ESG ever took off. S needed to be secured & not hanging on the end so this was a double reason for putting S in the middle.

8. Professor Paul Q. Watchman by the launch of your iconic and game-changing "Freshfields Report (I) ( https://www.unepfi.org/publications/investment-publications/a-legal-framework-for-the-integration-of-environmental-social-and-governance-issues-into-institutional-investment/ ) in October 2005, over a year later, in the wonderful ECOSOC Chamber at UNHQ, ESG was concretised into sustainable finance and responsible investment

Additional commentary by PCH gleaned from within the comments articulates the ESG origin story beautifully:\

ESG is a lens, radar to help markets/ investors/ companies better understand the risk and, critically, opportunity aspects of systems as represented by the SDGs and broader sustainability. No more no less.

Thank you Paul Clements-Hunt, to you and your team. Even if it is +20 years late.



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