Current geopolitical turbulence seems to be putting every investment strategy to the test. Yet for ESG fund managers, this unprecedented context does not weaken responsible investing — it highlights its full relevance. Insights from Michael Geeroms, Senior Fund Manager.

Markets are going through a period of turbulence and major geopolitical uncertainty. How does an ESG investor interpret this moment?

First, we need to put things into perspective: what we are experiencing today is serious, but not unprecedented. For several years now, geopolitical shocks have been occurring one after another — armed conflicts, tariff announcements, tensions over raw materials. These events affect all investors, ESG or not, whether they operate in listed or private markets, in equities or in bonds.

What may be more specific for ESG investors today is the energy dimension. ESG funds generally exclude oil companies from their portfolios. Yet these are precisely the companies that benefit the most from rising oil prices: they generate more cash flow and more profits. It’s an assumed short-term opportunity cost. But over a ten-year horizon, oil companies have not structurally outperformed the rest of the market. These are cycles. And above all, this context provides a powerful reminder of why the energy transition is not only desirable but essential.

In what way does this geopolitical shock actually strengthen the ESG approach?

It validates it, I would say. What ESG had advocated for years out of conviction — reducing dependence on fossil fuels, developing renewables — is now becoming a strategic priority for governments themselves. Relying on a resource whose global transit depends on a few critical chokepoints exposes economies to uncontrollable exogenous risks.
Europe is a textbook example. Thanks to investments in solar and wind implemented since 2022, the continent is absorbing the current shock far better than three years ago. Spain, for instance, has largely decoupled its electricity prices from oil fluctuations thanks to its solar capacity. This is no longer an ideological argument — it is an economic reality. Renewable energy strengthens our economies, makes them less dependent on other countries, and less vulnerable to crises. For an ESG investor, this is a tangible validation of the thesis we have defended from the beginning.

How are ESG criteria integrated into an investment decision? Does the macro context change the way they are applied?

No — and that’s precisely the strength of the approach. ESG is part of the core methodology; it does not fluctuate with market sentiment or geopolitical swings. It is applied structurally and systematically.

In our case, this translates into several steps. We first apply the ten principles of the United Nations Global Compact. We then exclude certain sectors — oil companies, tobacco, controversial weapons. And we go even further: many companies may seem perfectly reasonable at first glance, but reveal significant issues when assessed in detail. These are precisely the companies we choose to exclude.

There is also an underlying financial rationale: environmental, social or governance risks eventually translate into real financial risks — fines, reputational crises, compliance costs. Integrating ESG is therefore also a form of long-term financial analysis.

Of course, our ESG investment methodology follows CapitalatWork’s core investment principles: identifying solid companies through our own analysis, valuing them precisely, building a balanced and robust portfolio, and letting time do its work (“time at work”).

The defence sector is booming. How does ESG position itself in this context?

This is one of the most widely debated topics today in the responsible investment community, and it deserves nuance. Five years ago, the consensus was clear: one does not invest in weapons because they cause destruction. Since Russia’s war in Ukraine, views have evolved.

The conflict has reminded us of something we may have too quickly forgotten: defence, in a sovereign context, can play a positive role. It protects populations and deters aggression. This reasoning has led some ESG players to reconsider their stance on the conventional defence sector.

That said, certain red lines remain. European regulation excludes the most controversial weapons — chemical weapons, cluster bombs, nuclear weapons. Beyond these prohibitions, choices depend on convictions, but there is a requirement for coherence and transparency towards investors.

What do you say to an investor who doubts the relevance of ESG investing in such an unstable world?

First, we respond with facts. All available studies converge on one conclusion: there is no statistical evidence that an ESG methodology has a negative impact on performance.

Then we talk about what ESG builds over the long term. Avoiding sectors most exposed to regulatory risks, environmental scandals or governance crises also means avoiding time bombs in a portfolio. Stability and consistency over time have real value, particularly for wealth-oriented investors.

And finally, we talk about impact. Every investor who directs capital towards responsible companies sends a signal — to markets, company leaders, boards. Individually, that signal may seem modest. But combined with all investors engaged in this approach, it truly influences how companies will operate tomorrow. When shareholder pressure pushes a company to rethink industrial emissions or improve governance, the impact extends well beyond any single portfolio.

In a world where energy sovereignty, economic resilience and corporate transparency have once again become top-tier strategic priorities, ESG is no longer an activist niche. It is a mature investment approach, firmly rooted in contemporary realities. The real question is no longer whether one can afford to invest in ESG — it is whether one can afford not to.