Sasja Beslik is an unusual figure within the ESG ecosystem. The newly appointed senior adviser to RIMM, a sustainability data and tech provider, is passionate about getting ESG right within the investment industry.
But he is critical – to the point of damning – of the way it’s currently being managed.
“The entire purpose with ESG is to change the capital flows from what is deemed less sustainable to what is deemed more sustainable but unfortunately the concept has over the years been hijacked mostly by, I would say, asset owners packaging and reselling existing investment products,” Beslik told ESG Insight from his Stockholm office.
“They’re actually not in any way suited for changing or reallocating capital flows – companies produce the ESG numbers, they produce the financial numbers, but they’re not correlated.”
Beslik, who runs four of his own sustainability funds for SDG Impact Japan, says the answer is in data. In particular, he espouses the approach taken by RIMM in a suite of ready-to-launch data and analytics solutions on its SaaS platform that are being marketed to asset managers as well as the small- and medium-sized enterprises that comprise the company’s traditional customer base.
Climate 360 will provide companies with tools to help them validate progress towards their ESG targets in a way that is mindful of their financial performance. It’s the provision of this link between the two parts of firms’ integrated reports that attracted Beslik to the advisory position at the Singapore-based company.
“None of the ratings that are used across the world from any big provider is focusing on how sustainable products and services of companies are and how sustainable their business models are,” he said. “In principle, there is no connection between financial growth targets of the companies and their ESG and carbon strategies – and this is a ticking bomb, because it emphasises that companies really are not changing their underlying models.”
Critical Record
It might seem unusual that a high-profile figure within ESG investing, who boasts that his own sustainability funds have posted absolute returns of 23 per cent in the past 18 months, should be so critical of the industry in which he operates.
But being outspoken has almost become Beslik’s métier.
Last year, the chief investment strategy officer at SDG Impact Japan said Russia’s invasion of Ukraine exposed failings among asset managers to properly assess ESG in their investment strategies. They should have heeded the warnings eight years earlier when Moscow annexed the east of the country, he said.
Another favourite target of his is the firms that provide ESG ratings for investors, which he has argued are failing investors by not giving the insights into corporate sustainability that are needed.
And in 2019, he famously wrote an open letter to climate campaigner Greta Thunberg explaining that capitalism was not in fact the enemy of the planet but could be the saviour if properly aligned to climate targets.
Beslik reserves his deepest ire for asset managers industry, whom he describes as generally “lazy” and classifies into three categories. There are those that use ESG for marketing purposes and consequently are the biggest source of greenwashing. There are those who are retreating from ESG altogether amid backlash in the US. And then there are those who are making genuine efforts to fully understand the ESG performances of companies because they are sincere in wanting to direct capital where it’s needed.
“ESG needs to bring tangible change, tangible material difference for the companies and investments and this is something that I think with this new approach that we are developing at least should all take a step closer,” he said.
Backward Looking
Data can be the answer to the imbalances in the ESG space. But Beslik argues that too often it is failing investors. Mostly, this is because ESG data is backward looking, he said. Instead, Climate 360 makes estimates based on publicly available data that are calibrated to properly represent companies’ ESG performance relative to their forecast growth and also relative to benchmarks within the region that they operate.
Too often, Beslik argues, ratings and other analytics gauge performance according to an “Anglo-Saxon model” that holds all companies to the same standards as those in the West. This produces inaccurate, and unhelpful metrics for companies in other parts of the world that are battling different challenges to achieve their sustainability goals.
“These companies are being punished, discriminated against and they don’t get to access the full investment universe because they get low ratings,” he said. Consequently, there is little incentive for these companies to change.
Beslik is determined that investors, through Climate 360 – which launches next month – and similar products will be able to build the missing link between ESG performance and financial performance.
Currently, he believes, corporates’ ESG metrics can’t possibly be telling the truth when financial growth forecasts are so high. Climate 360 will challenge companies to clear the fog.
“You could end up with a conclusion that in the next five years, a company cannot grow more than more than 2% a year because it’s going to hit a CO2 target, and then they will have to find a way to decouple growth that carbon intensity,” he said. “But none of that is has been done so far in the data. Climate 360 will provide a sanity check.”
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