Amy O’Brien: ESG challenges are making us sharper and more precise

Responsible investing has morphed from a movement into a an industry on course to command $50trn in assets by 2025— a third of the capital at work in the markets, says Nuveen’s global head of responsible investing. Yet approaching responsible investing has remained as difficult as ever with hard to define and hard to measure dynamics, critics who’ve branded the approach as ‘woke capitalism’, and some complex language.

As a result, O’Brien has written the book A Field Guide to Responsible Investing: Asset Management in the Age of Polycrises to explore the evolution of responsible investing and explain why it is imperative for our future. She also explains how the growing pains in responsible investing reflect a maturation, rather than decline, in responsible investment demand and how frameworks are foundations for credibility.

Here, O’Brien answers PA Future‘s questions:

What motivated you to write this book? Who is it aimed at and what are you hoping to achieve?   

I started writing this book during a particularly challenging period for our industry – we were facing significant and more visible political backlash against ESG while simultaneously dealing with what I call “polycrises”: multiple interconnected global challenges hitting simultaneously including climate change, social inequality, and geopolitical instability. 

The motivation came from seeing persistent misconceptions about our work. What I and my team were doing every day, what we were hearing directly from clients about their needs and priorities did not match the “soundbites.”   

I thought it was important to articulate a first-person throughline encompassing the key facets of responsible investing which are often presented as standalones. Lastly, we need to make our field more accessible – through ‘translating’ practitioner speak, which can sometimes come across as insider baseball and challenging to navigate for those that are not specialists. 

As you explain, responsible investing has been complicated and some could say messy in parts. Is this due to fast-paced adoption, and then retraction? Anything else? 

The complexity in RI stems from several interconnected factors beyond recent experience. Having witnessed this evolution from the ground up, I’d say any “messiness” reflects how investors were initially organised around its foundational principles and the way in which the RI “toolkit” developed. Regional preferences and beliefs played a large role too.  Over the years, global frameworks started to address certain harmonisation needs but along the way the language of RI and sustainable finance became very complex. 

Similarly, the industry expanded across asset classes – from public equity to fixed income, real estate and private markets – each with unique risk-return dynamics and data requirements. What works for measuring carbon emissions in utilities doesn’t necessarily apply to supply chain management in consumer goods. 

The recent political polarisation has added another layer of complexity, with critics on both sides either demanding more aggressive action or dismissing the work entirely as “woke capitalism.” I view this as growing pains that is forcing a clearer articulation of our value proposition. 

The industry is maturing, and these challenges are making us sharper and more precise about our value proposition. 

How well would you say regulation and disclosure frameworks have responded? What would you have done differently?    

Let’s remember what we have been trying to solve for decades now…investors have been trying to obtain information on companies’ ESG – or “non-financial” performance based on a belief that such data was in fact financially relevant. Voluntary frameworks have played a major role in aligning stakeholders around quality, consistent and comparable disclosure on portfolio companies. Recent regulatory responses have addressed a broader range of what I would characterize as ‘credibility building’ measures (i.e. taxonomies, fund labeling). These are worthy objectives, but the challenge now is the discrepancies and fragmentation that currently exists across multiple jurisdictions. 

The evolution of disclosure frameworks shows remarkable progress. I was involved in early sustainability reporting initiatives that emerged from environmental disasters, which became the foundation for corporate sustainability reporting. Climate-related disclosure frameworks have successfully consolidated reporting standards, and international sustainability standards bodies are now providing the credibility and comparability the industry needs. 

What I would have done differently relates primarily to communication and inclusivity. Our industry became overly technical and insular, using jargon that alienated ordinary investors. Additionally, we could have better anticipated backlash resulting from not enough emphasis placed on the “why” of responsible investing and leaving that open to (mis)interpretation. 

Despite the uncertainty regarding a future state in which global harmonisation is achieved, clients are the ones pushing the industry forward.  

Which areas of responsible investing are commonly misunderstood?    

The notion that client motivations for responsible investing stem from “taking a (political?) stand” on a social or environmental topic, versus the business case for taking action, persists.  

Another misunderstanding is that responsible investing is primarily acted upon through values-based exclusions. In reality, it’s fundamentally about incorporating material risks and opportunities that traditional financial analysis might miss. 

The role of shareholder engagement is also frequently misunderstood. Critics often portray this activity as ideological demands being forced upon portfolio companies, but effective engagement works through dialogue and data. Our experience shows that constructive engagement can drive meaningful change over time. 

Finally, many assume responsible investing requires sacrificing returns. Climate change, social tensions, and governance failures represent genuine investment risks that prudent managers must address, regardless of values considerations. 

How can we tackle education and transparency around this? Are asset managers doing enough?   

Asset managers, including ourselves, must take responsibility and be active participants in solving for communication opportunities–taking jargon and terminology that may be considered exclusionary or elitist and enhancing the clarity and value offered by responsible investing principles. We’ve created an “alphabet soup” of frameworks and the use of practitioner speak doesn’t serve anyone well. 

Education starts with clearer articulation of our value proposition. Responsible investing serves two fundamental purposes: helping investors make better decisions by incorporating all material risks and opportunities, and achieving measurable real-world outcomes where appropriate. 

We need better storytelling that shows responsible investing in action. For example, an investment in Pharr, Texas’s municipal broadband bond didn’t just earn returns, it helped close the digital divide in America’s then “least-connected” city. Or how our C-PACE real estate investments have created nearly 26,000 energy jobs while delivering superior returns.  

Transparency must be geared towards genuine education as opposed to dense data (from the firm level to the portfolio level). Stewardship reports should explain not just the direction of a vote, but they must dive into the why. This is fundamental to unlocking democratisation, which is one of the main arguments of the book. 

We have seen lots of headlines around ESG investing ‘growing up’ or ‘maturing’. Do you agree?    

Absolutely. The industry is experiencing necessary growing pains that reflect maturation rather than decline.  

The current scrutiny and political pushback, while challenging, are making the industry sharper. Questions from sceptics aren’t new – I’ve been answering them for 30 years – and they’re forcing clearer articulation of our value proposition and appropriate boundaries as investment managers.  

Regulatory developments demonstrate maturation. The consolidation of climate disclosure frameworks from TCFD to ISSB, the EU’s SFDR classifications, and the SEC’s enhanced “names rule” provide the standardisation long lacking in our industry. These aren’t constraints – they’re foundations for credibility.  

The sophistication of client needs has evolved dramatically. Early responsible investing was largely about avoiding “sin stocks.” Today’s institutional clients want granular analysis of transition risks, nature-related dependencies, and measurable impact outcomes. This complexity reflects deeper integration into investment processes.  

However, maturation requires addressing communication failures. The industry must become less exclusionary and more accessible to individual investors. The upcoming generational wealth transfer means millennials and Gen Z – who’ve grown up with climate change and social justice as core concerns – will reshape capital allocation.  

The next phase isn’t about revolutionary change but evolutionary refinement: better data, clearer standards, improved communication, and broader democratisation of responsible investing principles. 

What’s your outlook for demand for responsible investment?   

I remain optimistic because responsible investing addresses fundamental 21st-century realities. Ignoring climate risks, social tensions, and governance failures isn’t a viable investment strategy. The question isn’t whether demand will continue, but how quickly the industry can meet it with credible, accessible solutions. 

Demand will continue growing, driven by generational shifts, regulatory momentum, and the increasing materiality of ESG factors in a world defined by polycrises. 

For example, over half of global investors responding to Nuveen’s annual EQuilibrium Global Institutional Investor Survey believe their allocations can drive the low-carbon transition. Even among institutions without net-zero goals, 64% are still investing in clean energy strategies so we see demand. We also have emerging areas like nature where nearly half of institutions identify nature loss as a top-five economic risk, but only three in 10 are increasing their focus on nature-related themes within their portfolios today as the market is still developing and so there are exciting opportunities.  

The regulatory trajectory supports continued growth. Despite political headwinds in some US states, global momentum toward mandatory ESG disclosure and taxonomy development creates structural demand. Climate risks are no longer something anyone, let alone an investor, can ignore – the recent Los Angeles wildfires causing $250bn+ in damages exemplify how physical risks now impact core economic assets.  

However, demand will increasingly differentiate between genuine responsible investing and superficial ESG marketing. The regulatory crackdown on greenwashing and enhanced disclosure requirements will separate serious practitioners from opportunists.  

The key opportunity is democratisation. While institutional adoption accelerates, individual investors lack accessible responsible investing options. Success requires product innovation that brings sophisticated ESG integration to 401(k) plans/pensions and retail portfolios.