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In our latest Impact Chat, Social Invest Director, Luke Cross, spoke to James Alexander, Chief Executive of the UK Sustainable Investment and Finance Association (UKSIF).

UKSIF works to boost the growth of sustainable finance and responsible investment in the UK. James is also a member of the Green Technical Advisory Group (GTAG), responsible for advising the government on implementing a UK Green Taxonomy. He also belongs to the Disclosures and Labels Advisory Group (DLAG), which advises the Financial Conduct Authority (FCA) on the UK’s Sustainability Disclosure Requirements (SDR) and fund labelling regime.

Here we run through some key talking points from the conversation.

Government needs to back sustainable investment initiatives

James Alexander explains that UKSIF is hopeful the incoming Prime Minister, whoever it is, will keep sustainable finance at the front of their mind.

He says the organisation is writing open letters to the next PM and chancellor to make the case for government support for sustainable investment.

“We need government to be supporting us, which in turn allows us to help them hit their targets.”

Climate change agenda is being drowned out

James explains the importance of maintaining momentum when it comes to combating climate change.

He suggests that COP26 was an important moment for climate commitments but says that since then the government may be “taking its foot off the gas slightly”.

On top of this, the invasion of Ukraine and the ongoing cost of living crisis has taken up a lot of bandwidth meaning focus has shifted from climate change, he says.  

Regulation is needed – but it needs to be done well

Luke and James discuss the need for regulation of sustainable investment and ESG in order to strengthen its reputation.

James says he believes regulation is coming “sooner or later” in the UK so it needs to be “well crafted, smart and workable”.

There’s a need to defend ESG’s reputation

James explores the recent criticism of ESG and sustainable investment from certain areas of the media.

He says the efforts to discredit ESG is caused by people “playing a politicized game” and he believes “it is incumbent on us to give a more truth-based narrative”.

He also talks through examples of where this has happened in US politics and business.

ESG must avoid oversimplified rating systems

James talks through the issues with ESG ratings in their current form and says “maybe we tried to simplify it too much”.

He argues that trying to boil an organisation’s impact down into a rating is complicated and this has led to criticism by high profile figures such as Elon Musk.

“We have got to start saying ‘this is complicated’” in order to build trust around ESG, he says.