HERD There are two parts to this. The first consideration for investors will always be legal obligations and fiduciary duties. Regulators are telling industry that they view climate change as a material, foreseeable and actionable risk it should be managing.

In this sense, it is very clear that climate change is a part of fiduciary duty – a view which is supported by multiple legal opinions. A whole range of sustainability issues are also part of the core fiduciary duties in meeting legal obligations.

The second consideration is risk-adjusted return. The days of ‘profit at all costs’ are gone. The industry understands that a wider range of factors can influence return and create financial risk beyond the traditional, binary factors.

Extra-financial risk can also have an impact on financial return, and sustainable finance brings a robust framework to quantifying and acting on this in a way that promotes an industry-wide understanding of how best to manage these issues. ESG is not a contravention but a fundamental part of core fiduciary duties.

O’CONNOR This question often comes down to timeframes. The evidence clearly shows that not to consider ESG and sustainability issues in the way you invest money is increasingly seen as a risk of breaching fiduciary duties. We know these issues play out in valuations, stock-market movements and ultimately in investment performance.

There will still be short-term profit chasers who set out largely to achieve short-term outcomes. However, it is critical that fiduciaries understand the time horizons within which their beneficiaries are operating.

Ultimately, to fail to consider ESG – particularly in the case of a pension or superannuation fund – means you may well maximise short-term profits but end up delivering a retirement into an Australia which is practically unliveable. What helps in this debate is that the argument that ESG is nonfinancial is proving itself to be erroneous. The Australian Prudential Regulation Authority has been explicit in saying ESG is material in our economic stability and there will be economic shocks if the risks aren’t managed.

The time horizons are becoming much shorter: ESG risks are playing out in the discounted cash-flow valuation periods of the next 1-5 years. It is easy to see it in this context, though some risks are still longer-term issues.

All the research we have seen or conducted is consistent with the conclusion that Australians don’t want their money banked or invested in a way that creates social or environmental harm. It is critical that we reflect consumer and client desires.