Well if you're anything like me, an acronym makes you flinch.

It stands for Environmental Social and Governance metrics.

And you may hear that and think, well, it means do gooding.

You might also think that actually it

reeks of hypocrisy, given that many financiers

and companies are tossing it around these days.

However, there's something really important to consider,

which is today, ESG is as much about risk management

as it is actually about social activism

or trying to change the world.

What many companies and investors have realised is that

if they ignore what people used to call "externalities,"

other words, a company's environmental footprint,

its impact on a community, what's happening in its supply

chain, what's happening in terms of social issues like

diversity, inequality.

If companies and investors ignore those issues,

it has a nasty habit of coming back to bite them.

What do we want?

Justice!

Just think about #MeToo and what happened there.

Before that scandal exploded - or rather that movement

exploded online - most boardrooms

assumed that sexual scandals, gender issues,

were something that they didn't really

need to worry about as a corporate governance matter.

But after #MeToo exploded, they suddenly realised that

the power of the crowd coalescing suddenly could shake

the entire board.

Just consider for a moment the turnaround

in fortunes of the fossil fuel sector.

If you dial back half a century, the oil and gas sector

in America was actually the largest single component

of the S&P 500.

But then it began to shrink in terms

of its relative footprint.

A decade ago, fossil fuel companies

were still incredibly powerful and strong, and so much so

that most of them assumed they could brush aside

the complaints and protests of environmentalists.

But in the last year, as the ESG sector

has swelled in power and might and confidence,

not only have the share prices of the big fossil fuel

companies fallen by half, but they're

beginning to be forced to think about doing things

like mergers.

They're beginning to being forced

to actually make pledges to cut back on their activities

and to embrace renewables, and to show the world that they

actually can be green.

This is our historic moment.

There are many reasons why the arrival of President Joe Biden

has been a dramatic change in style and policy and tone,

compared to the presidency of Donald Trump.

But one area where the contrast is particularly strong,

is in the area of ESG, and particularly

the environmental issues.

We desperately need a unified national response

to the climate crisis.

As soon as he arrived, President Biden

rejoined the Paris Climate Change Accord.

He pledged that he was going to try and clamp down

on the fossil fuel sector and bring

in much tougher environmental standards.

All of that shows that America really

is starting to embrace many of the environmental policies

that so many have been asking for such a long time.

But the really big question is, what happens next?

Because in addition to debates around shale or fossil fuel

or carbon, there's a whole set of potentially very important

changes happening in terms of the investing landscape, which

may or may not create a flood of money moving into ESG

products going forward.

Right now, it's actually surprisingly hard for investors

in America to invest in ESG-friendly assets

because the idea of fiduciary duty that's

been upheld in the Washington agencies

essentially says that fiduciaries,

i.e. fund managers, can only chase financial returns.

But if the Biden administration loosens those rules a bit,

you could see a whole flood of money moving into ESG

because suddenly pension funds and even retail investors

will want to actually purchase instruments

that can invest in ESG because they feel that it's easier.