Don’t expect attention on climate risk from investment providers who are focused on earnings estimates!

Climate disruption

CFA Institute thought leader Jason Voss highlights the on-going addiction of investment professionals to earnings estimates:

Despite all the talk about long-termism and ESG, the figures speak for themselves and remember these are self assessments with all the bias that comes with this. Over 70% of respondents say they are significantly or somewhat significantly influenced by earnings estimates.

And yet, ask a buy side analyst or fund management firm if they pay a lot of attention to sell side research and the answer is always a clear and unequivocal “no”!

What’s the way forward? One answer – as with drugs – is to find less damaging substitutes. Jason highlights some alternatives to traditional sell side research which would give investment users a cleaner, safer and cheaper hit.

Certainly, substitution of methadone for heroin can be a step forward if it’s part of a controlled therapeutic programme. But the real answer is to kick the habit, which means find people who want to do the same thing.

The investment industry needs it own 12 step process! But do the voluntary reform initiatives really serve this purpose?

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