WSJ: Don’t Call It ESG, Call It Resilience

There’s a new buzzword in sustainability circles when it comes to investing in renewables and clean technologies: resilience.

“In the beginning you had ‘social’ and ‘responsible investing’ and then it became ‘ethical investing’ and then a whole host of other things have sort of emerged from that,” said Jason Britton, chief product officer at asset manager Sphere.

“‘Sustainability’ was a buzzword for a really long time then ‘regenerative’ and ‘triple bottom line,’” he said. “This is an industry’s effort to describe an incredibly complex thing in a series of one or two marketing words. ‘Resilience’ is the bingo buzzword of the day.”

For investors, “resilience” is the new catch-all term for investments aimed at mitigating the effects of climate change on their businesses. Often seen alongside terms like “adaptation finance” or “transition finance,” ESG professionals are using the word increasingly in marketing and communications related to their investments.

The word has been touted by the likes of French bank BNP Paribas, the United Nations World Food Program, the European Commission and logistics giant DP World, all noting the importance of resilience in respect to climate.

London-headquartered investment bank Standard Chartered last week signed a deal for Chinese solar equipment capable of operating in extreme weather and storms. Prominent in the wording of the deal was “resilience.”  

“Whether we look at tornadoes and tropical storms in the U.S., like Hurricane Milton and Hurricane Helene, which caused over $500 billion in economic losses, or the L.A. wildfires earlier this year, these events are happening now,” said Marisa Drew, chief sustainability officer at Standard Chartered. “What we’re seeing in response to these devastating events is growing demand for investment in resilience, to mitigate economic losses caused by extreme weather events.”

Drew added that Standard Charted last year launched its Guide for Adaptation and Resilience Finance to get more investment into the sector. “This asset class, while still comparatively nascent, is evolving, and as the market recognizes that investing in adaptation and resilience is likely to have high returns in the face of extreme weather events, which are only becoming more frequent across our markets.”

The new taxonomy around environmental, social and governance investing comes as political pressure, especially in the U.S., mounts on investors. President Trump has launched tirades against climate and environmental initiatives, describing them as “a scam.”

During his first weeks in office, Trump promised to halt all offshore wind projects. This month The Wall Street Journal reported that a federal clean-energy program fueled by hundreds of billions of dollars from the Biden administration had lost more than a quarter of its staff as part of the president’s federal spending cuts.

Amid this pushback, banks and asset managers including BlackRock, JPMorgan, and Goldman Sachs have pulled out of the Net Zero Asset Managers initiative and the Net Zero Banking Alliance, though all have said they remain committed to their climate goals.

Sphere’s Britton added “ESG” has fallen out of favor, partly because it was often considered broad and hard to define within a large category of investing. “‘ESG’ is the broad stroke term everyone uses to describe values-oriented investing, but ESG really isn’t a thing. It’s not a framework, it’s not a methodology, it’s not a type of investing, it’s just a descriptor,” he said.

Despite the political pressure, climate and climate technologies remain a huge area in which to invest. Last year, energy transition related investments soared to $2 trillion, according to BloombergNEF, an energy transition research agency. Much of that was led by investments in renewable power, e-mobility and public infrastructure.

“We had already seen the effects of climate change and what we thought was we need to think about the way forward,” said Andy Tam, global vice president of energy management and decarbonization at DP World. He said that the company carried out a study to quantify the effects of climate change on its ports and terminals, as well as other parts of the business, saying that it had to be able to adapt to the changing weather and would be refreshing this again this year. “We asked ourselves, ‘What do we do that we need to adapt?’”

Tam said that heat, higher humidity and heavier rains were identified as risks, and that it had already started working to mitigate this, for example increasing substation capacity in Dakar to be able to cope with the heavier air-conditioning loads likely to be required as temperatures rise.

Moreover, long-term investors, especially pension funds, point to the fact that climate change is a lasting trend and providing finance in the field helps to futureproof investments and mitigate against the effects of extreme weather.

“If you think of the world in which we operate, there’s a high degree of uncertainty and high degree of volatility,” said Sylvain Santamarta, who is managing director and senior partner at Boston Consulting Group and leads its climate and sustainability transformation offering. “In that context, it is essential to ensure that your company is able to handle these uncertainties, this volatility, right, and that to me is what resilience really is about.”

In 2024, the International Chamber of Commerce said that over the past decade, climate-related extreme weather events created economic costs of $2 trillion. In the U.S. alone $500 billion worth of damages had come from weather related incidents like hurricanes, while the cost of the Los Angeles wildfires last month is still being assessed. Estimates at the moment put the cost at over $50 billion.

Santamarta added that protecting against physical risk is important for long-term competitiveness. “It’s about better understanding of your risks, including physical risk related to climate, and then building optionality that will allow you to protect yourself against the emergence of those destructions, including, sustainability-related disruption and opportunities.”

This article first appeared in the Wall Street Journal online edition February 28, 2025. It appeared in the March 1, 2025, print edition as 'ESG Investing Gains A New Catchall Term'.