Being British by birth and upbringing, American by marriage, long-term residence and naturalization, I have a front row seat to the confusion that sometimes arises at the intersection of two things that are almost-but-not-quite the same.

Common knowledge and shared attitudes that are taken for granted in one place don’t always hold elsewhere. And, because these things are taken for granted, the differences often remain below the surface, never acknowledged or recognized (or recognised). 

You might believe, for example, that “elevator” and “lift” are just two different words for the same thing. To me, though, they’re not the same: it is perfectly normal to initiate a conversation with a stranger in an elevator, yet weird to do so in a lift. 

The unspoken context of ESG

The context within which ESG is developing is one of those almost-but-not-quite the same things. In the past few years, sustainability has become a huge topic for the investment industry all around the world. And while this is true everywhere, the US is generally regarded as a laggard. The political backdrop is a big part of that: the Trump administration withdrawing from the Paris climate agreement and embedding hurdles to ESG investing in its 2020 rule on selecting plan investments. The Biden administration has quickly reversed both of these moves. But even under a new administration, the US is still different.

This is largely down to the common knowledge thing. In the UK, the broad case for sustainability is taken for granted. People in general recognize the need for a transition to a lower-carbon economy and for better protection of global resources such as fisheries and forests, for example. Further, they assume that other people recognize those needs, too. I know those things, you know those things, and we both know that we both know them.

You cannot make that assumption in the US. In a sense, this is odd, because pretty much everyone in the asset management industry actually does know those things. But the case for sustainability is not taken for granted; it’s not common knowledge.

So US firms, as they develop their sustainability policies and increasingly integrate ESG factors into their investment processes, must do so in a different context than their UK counterparts. US firms must navigate a more polarized political environment, and find ways to engage with a client base that cannot be assumed to all share a common starting point. 

There are challenges in the UK, too. Differences of opinion do exist: just because something is taken for granted doesn’t mean it’s universally true. And authentically embedding ESG into the investment proposition takes more than a taskforce and a marketing story. So there are similarities; the situations are almost-but-not-quite the same. Crucially, though, the unspoken context is different.

I’ve contrasted the two cultures I know best, but this point applies more broadly. From Canada to Japan, from France to Australia, anywhere you turn, there are differences in the sustainability context and those differences may include things that are treated as common knowledge elsewhere. In each case, for a shared understanding to be achieved, the things that are taken for granted must be recognized; the unspoken context may need to be spoken.

The Variegated States of America

The US, then, is different when it comes to ESG. The investment industry has on average been slower to embrace the change there than in many other markets. But really the story is more complex than that. As is so often true of America, the key to understanding is not in the average or the typical, but rather in the variations, in the range of views.