Sustainable finance is a controversial topic.
We introduced it talking about Banca Etica here on our blog and now we take advantage of a nice interview with Tariq Fancy, former executive of the American fund BlackRock.
BlackRock with Tariq Fancy enabled environment-conscious finance, society and governance to break through the usual business model.
Now one of the leading figures in sustainable finance argues that, ultimately, this system doesn’t work.
Or, better, that it can only work with government interventions that must apply stringent rules.
According to Fancy, people feel right with their conscience when they believe they are actively participating in sustainable finance because they are led to think that their capital and savings are invested by sharing some if not all of the values of those who invest.
Fancy observes that companies do not do green business because it is useful for the Planet, but they do it when for these same companies the green becomes useful to generate profits in the short term.
So sustainable finance but only if there is a return in the short term?
Maybe that’s right, according to Fancy. Sustainable finance will only really be sustainable when governments make substantial changes, for example to the tax lever. By effectively imposing a carbon tax on certain products in order to have to raise prices to the public and thereby ensure that people stop buying them.
In the interview, Tariq Fancy also enters the folds of the American system, not before observing that in the world of large fund managers (as BlackRock is) ESG products are offered because on the one hand, investors do not see commissions as burdensome. higher that are applied (after all they are doing something good) and on the other they imagine that they are taking away funds from “bad” companies.
Often underestimating the fact that there will always be some hedge fund that will be ready to buy those “good” shares as long as they remain profitable. Basically it is a dog that bites its own tail.
The financial system is unable to self-regulate.
If the rules and referees disappeared in football tomorrow, it would be dirty. The same thing happened in finance.
This is one of the passages from the interview that he deserves to be read in full. You can find it at this link.