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Companies with good ESG scores pollute as much as low-rated rivals

359 points by jredwards 3y ago

ihsw 3y ago
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Dig1t 3y ago
A component of ESG scores is how much you discriminate against white people. So of course you can have a good ESG score yet be a polluter.
- monero-xmr 3y ago
  You need to discriminate against Asians too! Or at least the algorithm I’ve seen used by universities and DEI HR groups ends up discriminating against them most.
- zarathustreal 3y ago
  The notion of a social score is absurd. You'd first have to define *society*. At least here in the USA, there is no monolithic society. Cultures differ greatly depending on which state you're in and sometimes even within a state.
  - kshahkshah 3y ago
    That's really it, we've no great unifying force as a country except occasional wars which force us to innovate. Otherwise we're usually just riding the wave of those times and really prolonging it at the great expense of everyone except those who know the game, want to play the game, and have enough money to participate in the game.
  - brbrodude 3y ago
    Its in the words themselves, society is not culture, society means bonding of people/association to a thing, generally implied "civil society". This has nothing to do with some guy being a punk rocker skateboarder anarchist and the other a Mormon and the other a rural farm guy, that they cannot be a part of the same society. That's just not it.
- kornhole 3y ago
  This explains why some of the most polluting and damaging companies can be the most woke in their training and marketing. This has led to a major backlash with some companies now advertising themselves as anti-ESG. Splitting out the scores that are determined by independent agencies (not fund managers) could maybe improve the situation, but the botched history will impede any efforts to reform.
- JamesBarney 3y ago
  A couple of hiring managers from oil and gas companies have told me there is a strong push to try not to hire white ICs if you can help it. This makes more sense in the context of trying to get a good ESG score to improve their P/E ratio.
  - Ekaros 3y ago
    Wouldn't good ESG score mean worse P/E ratio? As that would mean driving up the Price while Earnings might not be affected?
    - JamesBarney 3y ago
      What a better P/E ratio depends on whether you're buying or selling. As the CEO you want the highest price possible for your earnings.
      - Ekaros 3y ago
        Then it is probably better just to speak about straight up price.
  - rayiner 3y ago
    Lawyers are going to have a field day over the next few years litigating over these discriminatory practices in view of SFFA and it’s logical corollaries: https://s.wsj.net/public/resources/documents/AGLetterFortune100713.pdf https://s.wsj.net/public/resources/documents/AGLetterFortune... What’s remarkable is that apparently none of these hiring managers and executives saw this coming. The stuff they’ve put into writing is wild. Some of the stuff, like aspirational racial quotas, wasn’t even legal under pre-SFFA law. I don’t know who was advising these people.
- eli 3y ago
  What specifically are you talking about?
  - YSMLpT4b 3y ago
    [flagged]
  - Dig1t 3y ago
    Here’s Apple’s ESG report: https://s2.q4cdn.com/470004039/files/doc_downloads/2022/08/2022_Apple_ESG_Report.pdf https://s2.q4cdn.com/470004039/files/doc_downloads/2022/08/2... In it they say: “We’re making progress in increasing representation, and currently 50 percent of our workforce in the U.S. is made up of people from underrepresented communities.” “Please see the Appendix on page 81 for more data on representation” Then scroll to page 81. We see that 43% of the company is white (the US is 60% white as of the last census, so white people are in fact underrepresented at Apple) 27.9% of the company is Asian 9.4% black 14.8% Hispanic So they have stated that they are working on “increasing representation” (hiring) all categories of people except white. They report these numbers because they are used to calculate the company’s ESG score. More diversity = higher score, where diversity is defined as fewer white people. A higher ESG score means that ESG funds are more likely to invest in this company, pushing up the company’s value. This is a literal economic incentive to discriminate against white people.
    - eli 3y ago
      > They report these numbers because they are used to calculate the company’s ESG score. More diversity = higher score, where diversity is defined as fewer white people. Where do you see that? That's not part of the criteria for my Vanguard ESG fund.
      - Dig1t 3y ago
        “What's #ESG Score and How it is calculated” https://www.linkedin.com/pulse/whats-esg-score-how-calculated-koviid-sharma#:~:text=It%20is%20a%20rating%20system,responsibility%2C%20and%20corporate%20governance%20practices https://www.linkedin.com/pulse/whats-esg-score-how-calculate.... “There are several organizations and rating agencies that calculate ESG score” “Corporate Knights: Corporate Knights is a media and research company that publishes an annual ranking of the world's most sustainable corporations. Their methodology evaluates companies based on a range of ESG factors, including carbon productivity, diversity and inclusion, and clean revenue.” From the Corporate Knights website itself: “All publicly-traded companies with over US$1 billion in revenue are assessed across 25 key performance indicators, including % sustainable revenue, % sustainable investment, % taxes paid, carbon productivity, and racial and gender diversity.”
- specialist 3y ago
  Interesting. How's that measured, quantified?
- dang 3y ago
  "Eschew flamebait. Avoid generic tangents." - https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for. If you wouldn't mind reviewing the site guidelines and taking their intended spirit more to heart, we'd be grateful.
  - Dig1t 3y ago
    I am sorry, I was not trying to post flamebait. I have provided more context with sources and an explanation of what I was talking about in questioning responses further down in the thread. I would include them in the parent comment if I was still able to edit it. I really don’t feel like it was a harmful comment, it has net upvotes, the majority here seem to agree with the sentiment.
    - dang 3y ago
      Your comment pointed directly to race war. That's practically the biggest flamebait there is—especially when you use high-indignation, low-information phrases like "how much you discriminate against $group". It's important to understand the concept of "generic tangent" - when a thread moves away from the specifics of a given story toward more familiar/bigger/hotter/divisive/sensational things, the discussion is guaranteed to get more repetitive, less interesting, and more likely to turn into a flamewar. You can't judge these things by upvotes—sensational comments and flamewar comments frequently get heavily upvoted. This is a weakness of the upvoting system. Past explanations here: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&sort=byDate&type=comment&query=%22upvotes%20alone%22%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so....
      - Dig1t 3y ago
        Okay, I will be more substantive and try to leave out indignation in the future. I think I need to spend less time on the internet.
archo 3y ago
https://archive.is/UF7dt https://archive.is/UF7dt
justrealist 3y ago
ESG is fairly obviously used to whitewash companies whose main product goes against ESG principles. It's a bunch of irrelevant window-dressing compared to the core concern of what a company is selling yet somehow that never makes it into the ESG metric. Ex, Tesla has a terrible ESG scores, and Philip Morris has great ones. Is that because PM's diverse board actually outweighs giving people cancer? No, it's just that ESG was designed explicitly to allow companies to hand-wave away the core issue that they are selling bad things.
- Zigurd 3y ago
  It could be "a bunch of,,, window-dressing compared to the core concern of what a company is selling yet somehow that never makes it into the ESG metric." That, however, is the easy part. It's obvious BP is Big Oil. Or that cigarette companies sell poison. Or that gun makers' lobbyists have made the US a needlessly dangerous place. A gun made out of recycled materials is still, obviously, a gun. An ESG score just tells you whether they aren't racist sexist scum, too.
  - epicureanideal 3y ago
    > An ESG score just tells you whether they aren't racist sexist scum, too. Or that the direction of their sexism and racism goes in the scorer’s approved direction.
    - zarathustreal 3y ago
      100% this. Also, before we could even begin to score -isms we'd have to give them a concrete definition and that would obviate the need for a third-party to score them.
  - zarathustreal 3y ago
    If you think ESG scoring indicates anything about the culture of a company I've got a bridge to sell you
    - 3y ago
throwawa14223 3y ago
As far as I can tell ESG is a huge 'begging the question' problem. Companies with good ESG scores do better because we invest in companies with good ESG scores.
- lantry 3y ago
  But shouldn't the "free market" correct for this? If most people are putting their money into ESG but there isn't a real underlying performance difference, that creates an arbitrage opportunity for people willing to invest in non-ESG? Sadly, I can already hear the right-wing rebuttal: "the market isn't truly free because of the (bankers) running blackrock! we need govt intervention to ban ESG, then the market will be truly free!"
  - deleted 3y ago
    [deleted]
  - local_issues 3y ago
    The market isn't free because Vanguard and BlackRock are a duopoly on this. Vanguard isn't the issue though - they do literally nothing besides harvest tiny tiny fees at scale. BlackRock is a different story - look into their actions around SFH. They're not great.
    - fakedang 3y ago
      Fidelity is also another player, as is State Street. And like you stated, Fidelity is still akin to Vanguard while State Street is akin to Blackrock.
  - Aerroon 3y ago
    >But shouldn't the "free market" correct for this? It probably will. It will just take many years for this bubble to pop.
  - Ekaros 3y ago
    I think we can conclude that market isn't efficient. There is enough of big enough players that don't even try to invest in optimal manner. Think of pension funds and Sovereign wealth funds. If those are moved to invest ESG related it will naturally drive ESG up. And really I think whole market is not in sensible shape in general and has not been for a while. Not that crash is imminent or can't be kicked down the road a few more times.
gotoeleven 3y ago
They may pollute just as much but they definitely make more rainbow-spackled products during Pride Month which helps me feel good about the places I like to put my genitals.
breakingrules 3y ago
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hartator 3y ago
Wasn’t ESG score for BP surprisingly high?
- neonate 3y ago
  https://news.ycombinator.com/item?id=36975423 https://news.ycombinator.com/item?id=36975423
- yadaeno 3y ago
  PepsiCo, a company that each year fills 50 billion disposable plastic bottles with sugar water is considered "low risk". https://www.sustainalytics.com/esg-rating/pepsico-inc/1007911100 https://www.sustainalytics.com/esg-rating/pepsico-inc/100791...
  - gunapologist99 3y ago
    At least plastic is inert.. even then, it's still better than making batteries.
    - networkchad 3y ago
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tfandango 3y ago
ESG is tricky to talk about thanks to the politization of it. I work on some projects that involve ESG data and I have some thoughts. First there's LOTS of factors. If you bunch them all up into one number, it becomes meaningless as the article describes. I would think wiser minds would use this data to make investment decisions based on some specific risk, like hedging against some environmental disaster which may affect some companies more than others. Also, one thing I notice is that umbrella companies make ESG data complicated. Sometimes there will be data from a subsidiary but not the parent, how that all bubbles up is of note. Companies may use this to manipulate their scores. And quality of the data is important, it is based on research not any sort of testing or analytic model, so one must trust the researchers in this case (or not).
- warning26 3y ago
  As you note, the politicization of it makes it difficult to point out the flaws without people assuming you like hate the environment or something. The problem is, like any score, it's easily gamed. That's how we get companies like ExxonMobil having great ESG scores. The Atlantic had a great article about it: "When you invest in an ESG fund, you may think you’re buying into a highly curated selection of positive-outlier companies. In reality, it will often look similar to an ordinary market-wide index fund. The 10 biggest holdings in the S&P 500 ESG index include Big Tech companies such as Apple, Microsoft, and Alphabet; big banks such as JPMorgan Chase; and, incredibly, ExxonMobil." https://www.theatlantic.com/ideas/archive/2023/05/esg-woke-investing-trend-reality/674197/ https://www.theatlantic.com/ideas/archive/2023/05/esg-woke-i...
- lowkeyoptimist 3y ago
  Partially the politicization of it, but also because it is lumping together three issues that the society cannot even broadly agree one of the issues within 'ESG'. I don't think it is difficult to see why "ESG" is political by its nature.
  - tfandango 3y ago
    Thanks this is a nice way of saying what the other poster said :) I agree, ESG is just a bunch of numbers but if we can't agree on what the right output is then it's political in nature. I wonder if society has a bigger issue with disagreements about the E and S rather than the G, maybe not?
ZeroGravitas 3y ago
When they say pollute in the headline, they mean only C02, which makes the headline misleading clickbait even for people who don't understand what the S and G in ESG stand for. > It can very well be that a high-emitting firm is very good at governance or employee satisfaction. There is no strong relationship between employee satisfaction or any of these things and carbon intensity,” Goltz argued. > “Even the environmental pillar is pretty unrelated to carbon emissions,” he added, with this rating partly determined by factors such as a company’s use of water resources and waste management practices. It's amazing how something so utterly unremarkable has already inspired 4 unhinged comments.
- TylerE 3y ago
  I hate hate hate how pollution has been reduced to co2 and nothing else. Don't have to worry about global warming if contaminated water and soil kill us all first.
  - marcosdumay 3y ago
    It's more that the other kinds of pollution are local and most of the world will be quick to fine you or throw you in jail if you start to pollute too much of them.
    - CameronNemo 3y ago
      Hahahahahahaha 3M profitable poison printer go brrrr
- b59831 3y ago
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- jmholla 3y ago
  > for people who don't understand what the S and G in ESG stand for. They stand for Social and (corporate) Governance. I just looked it up myself. I wish these articles would explain that. Even the link on the word ESG is unhelpful.
CameronNemo 3y ago
I think caring about ESG, and especially evaluating a company's governance, is important. But I don't know how much I really want BlackRock and Vanguard to be the ones doing the scoring...
- zmgsabst 3y ago
  I agree: - caring about your investments aligning with your values is good - investment firms violating civil rights laws and promoting fashionable bigotry using retirement funds to coerce companies into self-destructive behavior is bad
  - jquery 3y ago
    Why are you prefixing bigotry with "fashionable"? Seems like a shibboleth. The only "fashionable" bigotry I can think of right now is anti-trans bigotry, but I don't see how that links to the rest of your statement.
    - networkchad 3y ago
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    - undefinedland 3y ago
      [dead]
      - jamathon 3y ago
        These type of statements are considered "anti-trans": > people with obvious mental problems akin to anorexia > allow people to invade opposite gender areas such as toilets or sport or any number of other arenas of life > when people ignore reality At least, that's what I've been told when I express similar concerns.
        undefinedland 3y ago
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Eumenes 3y ago
You don't need ESG to practice good corporate responsibility and governance. Carbon credits are a scam. Great interview on this topic by an esteemed NYU professor: https://www.youtube.com/watch?v=vt0C05i7pBs https://www.youtube.com/watch?v=vt0C05i7pBs
legitster 3y ago
Matt Levine: It's Easy to Make Oil Companies ESG: https://www.bloomberg.com/opinion/articles/2023-07-12/it-s-easy-to-make-oil-companies-esg#xj4y7vzkg https://www.bloomberg.com/opinion/articles/2023-07-12/it-s-e...
- lofatdairy 3y ago
  Was gonna post this. That said, this is not what Levine is writing about. Levine is writing about how you can restructure your portfolio to gain exposure to fossil fuels _without_ lowering your ESG metrics by simply investing in companies with fossil fuel holdings (since then your ESG is calculated by the carbon emissions of the holding firms and not the assets themselves). Here, the authors are essentially concluding that ESG ratings are actually poorly correlated w/ the actual emissions of the firms being rated. This is probably because the environmental metrics of ESG scores are forward-looking (thus you can offset current pollution by aggressive reduction projections), but I'm not in this field so I don't know anything more.
- MostlyStable 3y ago
  Also, there's evidence that moving investment from polluting to non-polluting industries at best has almost no impact, and potentially makes things worse: https://www.icpmnetwork.com/wp-content/uploads/2023/07/Counterproductive-Sustainable-Investing-the-Impact-Elasticity-of-Brown-and-Green-Firms.pdf https://www.icpmnetwork.com/wp-content/uploads/2023/07/Count...
  - FormerBandmate 3y ago
    Europe defunded their oil and gas industry and only great things happened from it. Just ask Ukraine The only way to stop pollution is to consume green. That’s it. The Saudis and the Russians don’t care about ESG
    - deleted 3y ago
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    - brmgb 3y ago
mcpackieh 3y ago
Not really news is it? From two years ago: https://www.bloomberg.com/professional/blog/bp-esg-outlook-solid-as-strategy-pivots-to-transition-emissions/ https://www.bloomberg.com/professional/blog/bp-esg-outlook-s... > BP’s ESG performance and outlook are bolstered by an ambitious net-zero emissions target from its operated upstream production by 2050, complemented by a tenfold surge in green spending, 50 gigawatts of renewable-power generation by 2030 and a 40% decline in oil and gas volume. Ecological metrics are favorable, with significant improvement in the 10 years since the Deepwater Horizon disaster, as BP’s safety and spill records are in-line with or above peer averages. BP’s board is among the most gender-diverse, and it has an investor-friendly governance structure and best-in-class ESG disclosures. So BP, noted exploder of oil rigs in the ocean, gets a boost to their ESG rating by, among other things, promising to do some shit 30 years from now (a promise doubtlessly worth less than the paper it was written on), and hiring more women. What do either of those have to do with BP's actual emissions impact? ESG exists to rehabilitate the reputations of companies like this.
- deleted 3y ago
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- ClumsyPilot 3y ago
  > investor-friendly governance structure This point is actually reasonable - a poorly governed company is a risk. Like if a single, unreadonable owner is prone to throwing hissy fits, ridking money in poorly thoigh out schemes and firing people because he woke up on the wrong side of the bed. Then thats a riskier investment.
  - mcpackieh 3y ago
    You're missing the forest for the trees.
psychphysic 3y ago
ESG is a waste of time, I can't wait until this fad dies down.
- Aerroon 3y ago
  When I first read about it I thought someone was playing an elaborate joke. It makes no sense why such ephemeral concepts should somehow lead to better investments. If anything, the entire ESG score thing seems like a scam to get people to make bad investments and to then bet against those investments.
  - ke88y 3y ago
    > It makes no sense why such ephemeral concepts should somehow lead to better investments. Each component alone makes sense, if interpreted in a way that is consistent with shareholder capitalism. 1. Environmental. Interpreted in terms of shareholder capitalism, Environmental might mean something like "how well does this company work as a hedge against increasingly likely tail risks, and how resilient will it be to policy changes should those increasingly common tail risks result in secular or policy shifts". E.g., a re-insurance company that is well-positioned WRT coastal flooding risk but which runs all of its offices on artisanal coal-fired powerplants -- that are a cheap and easy to replace with solar if and when needed -- should have a higher "Environmental" score than a "net zero" re-insurance company that is highly exposed to coastal flooding risk. 2. Social. Interpreted in terms of shareholder capitalism, Social should mean that middle management is not eg over-paying for labor from the Good Old Boys network instead of taking advantage of the cheapest available labor that meets quality requirements. 3. Governance. Interpreted in terms of shareholder capitalism, Governance might mean that you don't give a single founder or board member the ability to over-ride the preferences of the majority holders of equity. Also things like decisions being transparent to shareholders and so on. The joke isn't ESG per se. The joke is that ESG as implemented makes the completely idiotic assumption that shareholder capitalism can do anything at all to solve political fissures or account for externalized costs.
    - Aerroon 3y ago
grej 3y ago
I'm reminded of Goodhart's law https://en.wikipedia.org/wiki/Goodhart%27s_law https://en.wikipedia.org/wiki/Goodhart%27s_law "When a measure becomes a target, it ceases to be a good measure."
- XorNot 3y ago
  I feel like the corrollary to that would also be that measures invariably become targets over a long enough timespan.
nerdo 3y ago
Indulgences didn't signal much beyond what people paid the DNC^H^H^Hchurch platform either.
distant_hat 3y ago
Often companies with good ESG scores optimize for having good scores. Its like studying to the test and they may have particularly poor results outside of the test that they have studied for. Also, ESG is political and like all things that involve politics, many things that may be good for the score may be bad for the environment. Easiest example to see is in energy with things like nuclear power, and 'biomass' and coal.
- water9 3y ago
  Nuclear power if done safely is a much better alternative than say windmills which require extensive mining to make and kill thousands of birds a year.
  - maigret 3y ago
    You’ll hate cats then https://www.statista.com/chart/15195/wind-turbines-are-not-killing-fields-for-birds/ https://www.statista.com/chart/15195/wind-turbines-are-not-k...
    - genericone 3y ago
      You'll hate statistics even more: https://www.npr.org/sections/13.7/2013/02/03/170851048/do-we-really-know-that-cats-kill-by-the-billions-not-so-fast https://www.npr.org/sections/13.7/2013/02/03/170851048/do-we...
      - magicalist 3y ago
        That's not statistics, though? That's "we think there are fewer ownerless cats in the world than the authors do". > We don't quarrel with the conclusion that the impact is big, but the numbers are informed guesswork. Meanwhile the author outright says they're writing this opinion piece because they don't want to see cats banned as pets or people going out and killing a bunch of cats.
    - polski-g 3y ago
      Cats kill 2.4b birds a year? Buildings kill 600m? These numbers are completely unbelievable. Were the made up in a left-wing think tank staffed entirely by birds?
im3w1l 3y ago
If you squint a bit, you can see some parallels to the AI alignment issue. Like it's clearly important to align AI, but what exactly should we align it to? How do we come up with one score that measures goodness? And it turns out that if you get the score just a tiny bit wrong, it can lead to big issues and people hating it so much they wish there wasn't any score at all.
throwaway106382 3y ago
ESG isn't about actual results, it's about controlling the culture.
- dundarious 3y ago
  It's a cynical cash grab, meant to make companies look good, and give Joe Public the impression that "positive change is happening", when 1. It is not, 2. Some change is happening, but what little there is, is mostly negative (implicit bias training rackets, etc.) But it is primarily a racket. You don't need an ideology or a program for societal control to have a good racket -- in fact, it's best not to have one, so you can cynically jump onto the latest thing for this business cycle. So I disagree with you completely, despite being strongly critical of the ESG phenomenon. This is a pretty popular position BTW. Many ESG critics (probably such as yourself) are in a bubble, as they think people such as myself are supportive of ESGs just because they are left-wing, when to most left-wingers, it's yet another example in a long history of greenwashing. Only people in on the racket are for it: McKinsey types, CEOs, fund managers that are worried about activist investors such as Norway's Sovereign Wealth Fund, etc.
filecounter 3y ago
Hard to 'believe' in ESG/DEI when the rich continue to fly private jets and a black scientist has never won a nobel prize.
- HDThoreaun 3y ago
  > a black scientist has never won a nobel prize. This is the entire point of DEI. As Kendi says, the only way to undo past racism and become an equal society is a period of short term discrimination against the privileged. Not saying I agree, but a Nobel is basically a career achievement and dei has been around for what, a decade? Would be surprising if it already lead to a Nobel.
  - filecounter 3y ago
    'Diversity' started as an anti-semitic agenda in the 1920's in order to limit the number of Jewish students at Harvard. https://www.timesofisrael.com/harvards-jewish-quotas-cited-in-us-supreme-courts-affirmative-action-ruling/ https://www.timesofisrael.com/harvards-jewish-quotas-cited-i... .
- deleted 3y ago
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rhaway84773 3y ago
The whole ESG discussion is fraught with misinformation. Different ESG scores mean different things depending on what scoring you’re looking at. So, for example, an environmentally focused organization may rate a company high in ESG because they have low emissions and/or push for green legislation. However, the more well known ESG scores that we see in the news are often from the financial press and are intended for investors, and often reflect the ESG risk exposure for the companies in question. This tends to have the ironic effect of making environmentally friendly companies have low ESG scores, and less environmentally friendly companies high scores. So, for example, Elon Musk complained about getting a low ESG risk score from S&P, but that made complete sense because Tesla was heavily exposed to governmental green policies. Remove CA’s CARB credits, or various green credits and tax benefits, etc and Tesla’s business would suffer. Exxon, OTOH, was unlikely to see any such impact leading to a lower ESG risk score. The key thing to understand is that there is no single ESG score. Every company creates different scores based on different factors and intended for different purposes, and their customers decide which ones are effective for their intended purposes and those scores tend to last and do well. The political backlash against ESG scores is so misplaced. It’s the equivalent of a personal wealth guru who believes that credit cards are not good for most poor people because they perpetuate their poverty deciding that therefore credit ratings for companies are bad, because both have something to do with the borrowing and lending of money.
- JumpinJack_Cash 3y ago
  > > The political backlash against ESG scores is so misplaced. Rating agencies should rate the financial risk of stuff (mostly bonds they should try and do it well given that whole mess they created in 08) They should not be involved in politics. When a rating agency goes beyond number crunching and they start looking at other stuff they are already out of their role. When they start looking at the number of women on the board that is preposterous. Same is true for Fitch, Moodys, Bloomberg etc. Everybody wants to be a politician and a virtue signaler these days...too bad that in a country full of politicians and virtue signalers nobody does any actual work.
  - ClumsyPilot 3y ago
silisili 3y ago
ESG is nothing more than making companies kowtow to Blackrock. Kiss that ring, companies, and maybe they'll throw a few crumbs at you.
gitfan86 3y ago
ESG is such a obvious scam. It would be like this: Wife: Have you been cheating on me? Husband: Lets check my APS score. Wife: What? Husband: Adultery, Pushups and Soccer Watching score. Looks like I'm in the 1% of husbands as calculated by the experts. So I don't think you have anything to worry about.
- Ygg2 3y ago
  Just offset CO2 emissions by hiring more diverse staff from New York. Brilliant! How come Fossil fuel industry never thought of that?
  - foderking 3y ago
    lmfao
  - RcouF1uZ4gsC 3y ago
    Actually, they did https://www.investors.com/news/esg-companies-list-top-100-esg-stocks-2022/ https://www.investors.com/news/esg-companies-list-top-100-es... ConocoPhillips and Exxon Mobil are one the list along with a trucking company at number 2 and various other oil companies.
    - ornornor 3y ago
      In the same vein, a major bottled water (plastic bottles) company (Volvic) draining local water sources is a B-Corp where I live… So is Nespresso.
    - atonse 3y ago
      Here’s a funny thing, if oil companies technically powered their refineries with renewable energy, would they be some of the most green companies out there?
- smfjaw 3y ago
  offset your cheating (emmissions) by buying adultery (carbon) credits
gnicholas 3y ago
A very interesting podcast on the topic, arguing that it doesn't make sense to divest from industries that pollute in favor of those that don't pollute — even if your goal is to reduce pollution: https://freakonomics.com/podcast/are-e-s-g-investors-actually-helping-the-environment/ https://freakonomics.com/podcast/are-e-s-g-investors-actuall...
DevKoala 3y ago
The funny thing is that the Environmental metric is the only objective one while the Social and Governance ones can be bullshitted and manipulated. Those three things should have never been coupled. It’s all a scam.
- gnramires 3y ago
  I dunno, I think it could be combined in smarter ways, e.g. min(E,S,G) (or some kind of soft-min)[1]. Or give different weights for more uncertain measures. I think there's a very large amount of knowledge (in various fields) around evaluating those things, and we could have much more if we put some effort; also, we don't necessarily need to make everything 100% based on a small set of metrics. You could have some kind of adaptive evaluation that tries to find the most impactful events for that organization (e.g. trying to track down pollutants and quantify their impact, trying to track down social impacts and quantify them, etc.). In medical and charity fields for example there is QALYs (which do have serious problems still!), but are at least a reference point for impact -- to given an example; in comparing development we have HDI; etc.. Overall, I think trying to improve those things in a systematic way is the only real way to improve them. I want to know how well each company is doing in various areas. We are currently mostly blind to that. And we should be mindful not to let the ones trying to game and undermine the systems win, and sincerely look at impact in all areas. [1] Ideally, I think a metric would be able to measure something like a 'meaning of life difference' from different choices (and assign a corresponding metric for say an organization based on certain counterfactuals). Of course that's too difficult in general, but we can strive for example to keep the planet healthy and establish some standard "unit" for a healthy society (could be translated to money, but there could be some issues with that), establishing a trade-off say between say saving someone's life now (through a health intervention), and saving lives in the future by improving planetary conditions (with less pollution). Those things are perhaps surprisingly comparable (and surprisingly linear/additive as well). There are mentions of Goodhart's Law and it certainly applies somewhat (if we tried simple, naive metrics): but Goodhart's Law doesn't apply when there are real, smart people doing the evaluation, in a dynamic way, using quantitative tools sensibly. And finally there are choices perhaps no such evaluation could capture, questions about what future do we want for ourselves in a broader cultural and artistic sense (which is why in the end freedom to support what you want as an individual is important). I really think this is going to play a significant part in how we address many large scale issues!
archsurface 3y ago
I thought I wouldn't comment on this because saying it's a scam would just get me downvoted regardless of how I present it - colour me surprised, it seems to be comfortably the majority sentiment.
roody15 3y ago
Yes because these companies just do the math… hmm being truly environmentally friendly is tough for maximizing profits… hmm okay let’s just do a bunch of corporate safe political progressive posturing and marketing on everything else to off-set the E score. So a non-union mega corp that exploits labor in third world countries gets a decent overall ESG score by making a big show of support of gay/trans or “diversity” goals. It’s math .. and the bottom line and honestly nonsense.
rationalfaith 3y ago
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westurner 3y ago
From https://www.ft.com/content/b9582d62-cc6f-4b76-b0f9-5b37cf15dce4 https://www.ft.com/content/b9582d62-cc6f-4b76-b0f9-5b37cf15d... : > Keeran Beeharee, vice-president for ESG outreach and research at Moody’s, agreed that ESG investment does not necessarily help an investor create a low-carbon portfolio, or any other specific goal. > “[There is a] perception that ESG assessments do something that they do not. ESG assessments are an aggregate product, their nature is that they are looking at a range of material factors, so drawing a correlation to one factor is always going to be difficult,” Beeharee said. > “In 2015-16, post the SDGs [UN sustainable development goals] and COP21 [Paris Agreement], when people began to really focus on the issue of climate, they quickly realised that an ESG assessment is not going to be much use there and that they need the right tool for the right task. There are now more targeted tools available that look at just carbon intensity, for example,” he added. Emission intensity includes CO2 (Carbon Intensity) and also Methane and other emissions. Emission intensity: https://en.wikipedia.org/wiki/Emission_intensity https://en.wikipedia.org/wiki/Emission_intensity UN SDG Indicators 2023 revision (Goals, Targets, Indicators) https://unstats.un.org/sdgs/indicators/Global%20Indicator%20Framework%20after%202023%20refinement_Eng.pdf https://unstats.un.org/sdgs/indicators/Global%20Indicator%20... ctrl-f "carbon", "emission", "methane" > Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation > 9.4.1 CO2 emission per unit of value added > Goal 13. Take urgent action to combat climate change and its impacts > 13.2.2 Total greenhouse gas emissions per year SDG9 > "Target 9.4: Upgrade all industries and infrastructures for sustainability": https://en.wikipedia.org/wiki/Sustainable_Development_Goal_9#Target_9.4:_Upgrade_all_industries_and_infrastructures_for_sustainability https://en.wikipedia.org/wiki/Sustainable_Development_Goal_9... SDG13 > "Target 13.2: Integrate climate change measures into policy and planning": https://en.wikipedia.org/wiki/Sustainable_Development_Goal_13 https://en.wikipedia.org/wiki/Sustainable_Development_Goal_1... How should ESG composite scores be updated to reflect Emission intensity (to include CO2, and CH4,) as a weighted factor?
nologic01 3y ago
ESG is a deeply problematic concept but a world without any "esg" concerns at all is a terminal world with an expiry date fairly close. So the positive attitude is to see the glass as 5% full rather than 95% empty and see what could be the next step. Unbundling the acronyms is the obvious first concern. They smack of a kitchen sink approach to everything the corporate thinks is a reputation risk. As factors they have no internal coherence. Then, for each of the underlying issues one must clarify and distinguish whether it is an assessment of current state of the world or future risks (and to whom, what? earnings, value, reputation, clients, mother earth etc). Finally, even in the most tractable case (accounting for current co2 emissions, which is a tiny fraction of environmental footprint and says nothing about the future) there is a mountain of methodological challenges to climb: Who is emitting, who is enabling it, who is demanding it, who benefits most etc. The modern economy is a giant hairball of dependencies yet we like to ignore all that. The "ESG period" of the sustainability transition is the financial system taking a first peek at the actual state of the world as opposed to "the number goes up". Its no surprise that many just want to close the lid and pretend they never saw anything. But its not possible unless we accept we are an amoral last generation that devolves into a madhouse. It took credit ratings a century to mature and they are still heavily gamed / leading to systemic crises. What makes you think this existential question for the unhinged corporate profit-focused entities that dominate modern economic life will get resolved any sooner? There is a long, long road ahead. But if you look for purpose look no further.
otabdeveloper4 3y ago
Indulgences don't make you sin less? Who would have thought!
jnsaff2 3y ago
ESG is about how sustainable the COMPANY (stock price) is when looking from those three aspects i.e is it a safe investment to not lose your pension in it. The survivability of everything around it is not to say irrelevant but at least a few steps removed. So it tries to assess whether your money is still there, not the planet. Obviously the marketing tries to make you believe that it’s about the planet.
- jnsaff2 3y ago
  So it looks at how well the company is prepared to do when the climate changes (mostly by having written some plans). It does not care much about what the company actions do to the world.
  - jnsaff2 3y ago
    In short: ESG measures the worlds impact on the company NOT the company's impact on the world. Better ESG score means company is more resilient to change in those factors.
    - Gareth321 3y ago
      > In short: ESG measures the worlds impact on the company NOT the company's impact on the world. This is not correct. ESG tracks, among others, the carbon output of a business. In other words, the impact of the business on the world. You can read more here: https://www.pwc.com/ca/en/today-s-issues/environmental-social-and-governance/measure-esg-performance.html https://www.pwc.com/ca/en/today-s-issues/environmental-socia...
      - jnsaff2 3y ago
        So I did look at the report you linked. It's very high level and sparse .. even then the only references to emissions reductions (including carbon) were pretty much: "company must adhere to laws and regulations and must take into account the future emissions reductions that are governmental targets" (paraphrasing).' I don't see how this is different from what I said. It does not rate how environmentally friendly the company is, it rates whether the company is in compliance with current and it has plans future regulations. Edit: there is carbon emissions section that is helpfully labelled as one of the things that "CAN be tracked". So this seems to be optional and also the benchmark seems to be self determined by the company rated.
gmerc 3y ago
Shocking, the metric becomes the goal. It’s like working at Meta.
iamflimflam1 3y ago
Lots of the comments I’m reading really indicate how well the political campaign against ESG has worked. Lots of knee jerk comments without much actual analysis and thinking. Most of the commentators aren’t even aware what E, S and G stand for (environmental, social governance).
- undefinedland 3y ago
  Equally, one might say that you don't know how the world works and how these scores will be governed by the few to get power over the many.
  - iamflimflam1 3y ago
    No one is forcing you to make decisions based on ESG. There are fund that invest based on ESG. Equally there are funds that don't. You can also buy whatever stocks and shares you want. ESG does not prevent companies from listing. If you don't want to invest based on ESG then don't.
    - undefinedland 3y ago
      Not yet they aren't; wait until governments or other highly influential organisations such as banks decide to direct pension funds and the like to invest only according to certain ESG profiles and give individuals a convoluted and difficult option if they wish to "opt out". If these concerns people have about ESG are so important, they should be passed at the democratic level via legislation. At least that way, people could debate and change the system as needed. You didn't need ESG to get rid of lead plumbing - just an interested government. Of course these days, we can only have private power, not public power.
- fallingknife 3y ago
  This is also a knee jerk comment that contains no actual analysis and thinking
klipklop 3y ago
I’ll likely get downvoted, but ESG is a way for finance/banking to punish companies that don’t align with their politics. My favorite part about the whole thing is how it went from “conspiracy theory that will never actually be implemented” to I have to do ESG training at work within a few years.
LatteLazy 3y ago
People keep making tiny or zero progress. Then holding parties and acting like the problem is solved. Then getting shocked when it isn't. ESG is nice, but it doesn't cure everything, at best it helps empower some people trying to do good. You should not expect it to "work" on a large, statistically significant scale. It was never going to. The Paris accord is another example: it was an agreement to all just do our own thing and only what we want. So obviously nothing has been achieved. People really struggle with the idea that something small is not everything...
lloydatkinson 3y ago
I was briefly involved in some ESG stuff. I echo similar sentiment here; mostly a scam or at best nonsensical and just another box checking exercise.
Blackstrat 3y ago
ESG makes Larry Fink and the rest of the globalist cabal happy. It's much like a magician's sleight of hand, pay attention to our score and ignore what we're really doing.
FooBarBizBazz 3y ago
I was trying to think of an alternative, which the bankers could do, if they wanted, which would be narrowly focused on climate change. Like ESG, the idea is that it's something big financial actors can do without getting government on board. First thought: Just bid up the price of oil. Make it too expensive for the refiners. Drive gasoline up to $50/gallon. Every drop on the market, just buy up and do not burn. There is an issue with this, of course, which is that it still (hugely) incentivises extraction. You don't want to have to physically store the stuff. But you also can't pay for notional oil left underground: "Yeah, trust us, we didn't sell that barrel to somebody else for additional money." Second thought: You could subsidize the hell out of a substitute though, thereby killing demand. Investors poured money into Uber at a loss just so it could eat up market share, right? Why can't you do that with solar panels and electrification? (Where's my electric car paid for by the Saudi Sovereign Wealth Fu... oh.) You can even create network/lockin effects: Electric cars cost half the price, so everybody buys one, so gas stations go out of business. These are very expensive strategies, but they seem to directly use the price mechanism to try to achieve your goals. Is something cheaper and more efficient possible? Something about efficient markets would seem to imply that that isn't possible, to the extent that efficient markets exist... Idea 3: Continuing brainstorming -- - Naked-short futures for beachfront lots in Florida and Bangladesh? - Buy (underpriced) insurance (basically PUTs) on same? I feel a creative finance person could come up with lots of things.

359 points by jredwards 3y ago

ihsw 3y ago

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A component of ESG scores is how much you discriminate against white people. So of course you can have a good ESG score yet be a polluter.

monero-xmr 3y ago
You need to discriminate against Asians too! Or at least the algorithm I’ve seen used by universities and DEI HR groups ends up discriminating against them most.
zarathustreal 3y ago
The notion of a social score is absurd. You'd first have to define *society*. At least here in the USA, there is no monolithic society. Cultures differ greatly depending on which state you're in and sometimes even within a state.
- kshahkshah 3y ago
  That's really it, we've no great unifying force as a country except occasional wars which force us to innovate. Otherwise we're usually just riding the wave of those times and really prolonging it at the great expense of everyone except those who know the game, want to play the game, and have enough money to participate in the game.
- brbrodude 3y ago
  Its in the words themselves, society is not culture, society means bonding of people/association to a thing, generally implied "civil society". This has nothing to do with some guy being a punk rocker skateboarder anarchist and the other a Mormon and the other a rural farm guy, that they cannot be a part of the same society. That's just not it.
kornhole 3y ago
This explains why some of the most polluting and damaging companies can be the most woke in their training and marketing. This has led to a major backlash with some companies now advertising themselves as anti-ESG. Splitting out the scores that are determined by independent agencies (not fund managers) could maybe improve the situation, but the botched history will impede any efforts to reform.
JamesBarney 3y ago
A couple of hiring managers from oil and gas companies have told me there is a strong push to try not to hire white ICs if you can help it. This makes more sense in the context of trying to get a good ESG score to improve their P/E ratio.
- Ekaros 3y ago
  Wouldn't good ESG score mean worse P/E ratio? As that would mean driving up the Price while Earnings might not be affected?
  - JamesBarney 3y ago
    What a better P/E ratio depends on whether you're buying or selling. As the CEO you want the highest price possible for your earnings.
    - Ekaros 3y ago
      Then it is probably better just to speak about straight up price.
- rayiner 3y ago
  Lawyers are going to have a field day over the next few years litigating over these discriminatory practices in view of SFFA and it’s logical corollaries: https://s.wsj.net/public/resources/documents/AGLetterFortune100713.pdf https://s.wsj.net/public/resources/documents/AGLetterFortune... What’s remarkable is that apparently none of these hiring managers and executives saw this coming. The stuff they’ve put into writing is wild. Some of the stuff, like aspirational racial quotas, wasn’t even legal under pre-SFFA law. I don’t know who was advising these people.
eli 3y ago
What specifically are you talking about?
- YSMLpT4b 3y ago
  [flagged]
- Dig1t 3y ago
  Here’s Apple’s ESG report: https://s2.q4cdn.com/470004039/files/doc_downloads/2022/08/2022_Apple_ESG_Report.pdf https://s2.q4cdn.com/470004039/files/doc_downloads/2022/08/2... In it they say: “We’re making progress in increasing representation, and currently 50 percent of our workforce in the U.S. is made up of people from underrepresented communities.” “Please see the Appendix on page 81 for more data on representation” Then scroll to page 81. We see that 43% of the company is white (the US is 60% white as of the last census, so white people are in fact underrepresented at Apple) 27.9% of the company is Asian 9.4% black 14.8% Hispanic So they have stated that they are working on “increasing representation” (hiring) all categories of people except white. They report these numbers because they are used to calculate the company’s ESG score. More diversity = higher score, where diversity is defined as fewer white people. A higher ESG score means that ESG funds are more likely to invest in this company, pushing up the company’s value. This is a literal economic incentive to discriminate against white people.
  - eli 3y ago
    > They report these numbers because they are used to calculate the company’s ESG score. More diversity = higher score, where diversity is defined as fewer white people. Where do you see that? That's not part of the criteria for my Vanguard ESG fund.
    - Dig1t 3y ago
      “What's #ESG Score and How it is calculated” https://www.linkedin.com/pulse/whats-esg-score-how-calculated-koviid-sharma#:~:text=It%20is%20a%20rating%20system,responsibility%2C%20and%20corporate%20governance%20practices https://www.linkedin.com/pulse/whats-esg-score-how-calculate.... “There are several organizations and rating agencies that calculate ESG score” “Corporate Knights: Corporate Knights is a media and research company that publishes an annual ranking of the world's most sustainable corporations. Their methodology evaluates companies based on a range of ESG factors, including carbon productivity, diversity and inclusion, and clean revenue.” From the Corporate Knights website itself: “All publicly-traded companies with over US$1 billion in revenue are assessed across 25 key performance indicators, including % sustainable revenue, % sustainable investment, % taxes paid, carbon productivity, and racial and gender diversity.”
specialist 3y ago
Interesting. How's that measured, quantified?
dang 3y ago
"Eschew flamebait. Avoid generic tangents." - https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for. If you wouldn't mind reviewing the site guidelines and taking their intended spirit more to heart, we'd be grateful.
- Dig1t 3y ago
  I am sorry, I was not trying to post flamebait. I have provided more context with sources and an explanation of what I was talking about in questioning responses further down in the thread. I would include them in the parent comment if I was still able to edit it. I really don’t feel like it was a harmful comment, it has net upvotes, the majority here seem to agree with the sentiment.
  - dang 3y ago
    Your comment pointed directly to race war. That's practically the biggest flamebait there is—especially when you use high-indignation, low-information phrases like "how much you discriminate against $group". It's important to understand the concept of "generic tangent" - when a thread moves away from the specifics of a given story toward more familiar/bigger/hotter/divisive/sensational things, the discussion is guaranteed to get more repetitive, less interesting, and more likely to turn into a flamewar. You can't judge these things by upvotes—sensational comments and flamewar comments frequently get heavily upvoted. This is a weakness of the upvoting system. Past explanations here: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&sort=byDate&type=comment&query=%22upvotes%20alone%22%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so....
    - Dig1t 3y ago
      Okay, I will be more substantive and try to leave out indignation in the future. I think I need to spend less time on the internet.

archo 3y ago

https://archive.is/UF7dt https://archive.is/UF7dt

justrealist 3y ago

ESG is fairly obviously used to whitewash companies whose main product goes against ESG principles. It's a bunch of irrelevant window-dressing compared to the core concern of what a company is selling yet somehow that never makes it into the ESG metric. Ex, Tesla has a terrible ESG scores, and Philip Morris has great ones. Is that because PM's diverse board actually outweighs giving people cancer? No, it's just that ESG was designed explicitly to allow companies to hand-wave away the core issue that they are selling bad things.

Zigurd 3y ago
It could be "a bunch of,,, window-dressing compared to the core concern of what a company is selling yet somehow that never makes it into the ESG metric." That, however, is the easy part. It's obvious BP is Big Oil. Or that cigarette companies sell poison. Or that gun makers' lobbyists have made the US a needlessly dangerous place. A gun made out of recycled materials is still, obviously, a gun. An ESG score just tells you whether they aren't racist sexist scum, too.
- epicureanideal 3y ago
  > An ESG score just tells you whether they aren't racist sexist scum, too. Or that the direction of their sexism and racism goes in the scorer’s approved direction.
  - zarathustreal 3y ago
    100% this. Also, before we could even begin to score -isms we'd have to give them a concrete definition and that would obviate the need for a third-party to score them.
- zarathustreal 3y ago
  If you think ESG scoring indicates anything about the culture of a company I've got a bridge to sell you
  - 3y ago

throwawa14223 3y ago

As far as I can tell ESG is a huge 'begging the question' problem. Companies with good ESG scores do better because we invest in companies with good ESG scores.

lantry 3y ago
But shouldn't the "free market" correct for this? If most people are putting their money into ESG but there isn't a real underlying performance difference, that creates an arbitrage opportunity for people willing to invest in non-ESG? Sadly, I can already hear the right-wing rebuttal: "the market isn't truly free because of the (bankers) running blackrock! we need govt intervention to ban ESG, then the market will be truly free!"
- deleted 3y ago
  [deleted]
- local_issues 3y ago
  The market isn't free because Vanguard and BlackRock are a duopoly on this. Vanguard isn't the issue though - they do literally nothing besides harvest tiny tiny fees at scale. BlackRock is a different story - look into their actions around SFH. They're not great.
  - fakedang 3y ago
    Fidelity is also another player, as is State Street. And like you stated, Fidelity is still akin to Vanguard while State Street is akin to Blackrock.
- Aerroon 3y ago
  >But shouldn't the "free market" correct for this? It probably will. It will just take many years for this bubble to pop.
- Ekaros 3y ago
  I think we can conclude that market isn't efficient. There is enough of big enough players that don't even try to invest in optimal manner. Think of pension funds and Sovereign wealth funds. If those are moved to invest ESG related it will naturally drive ESG up. And really I think whole market is not in sensible shape in general and has not been for a while. Not that crash is imminent or can't be kicked down the road a few more times.

gotoeleven 3y ago

They may pollute just as much but they definitely make more rainbow-spackled products during Pride Month which helps me feel good about the places I like to put my genitals.

breakingrules 3y ago

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hartator 3y ago

Wasn’t ESG score for BP surprisingly high?

neonate 3y ago
https://news.ycombinator.com/item?id=36975423 https://news.ycombinator.com/item?id=36975423
yadaeno 3y ago
PepsiCo, a company that each year fills 50 billion disposable plastic bottles with sugar water is considered "low risk". https://www.sustainalytics.com/esg-rating/pepsico-inc/1007911100 https://www.sustainalytics.com/esg-rating/pepsico-inc/100791...
- gunapologist99 3y ago
  At least plastic is inert.. even then, it's still better than making batteries.
  - networkchad 3y ago
    [dead]

tfandango 3y ago

ESG is tricky to talk about thanks to the politization of it. I work on some projects that involve ESG data and I have some thoughts. First there's LOTS of factors. If you bunch them all up into one number, it becomes meaningless as the article describes. I would think wiser minds would use this data to make investment decisions based on some specific risk, like hedging against some environmental disaster which may affect some companies more than others. Also, one thing I notice is that umbrella companies make ESG data complicated. Sometimes there will be data from a subsidiary but not the parent, how that all bubbles up is of note. Companies may use this to manipulate their scores. And quality of the data is important, it is based on research not any sort of testing or analytic model, so one must trust the researchers in this case (or not).

warning26 3y ago
As you note, the politicization of it makes it difficult to point out the flaws without people assuming you like hate the environment or something. The problem is, like any score, it's easily gamed. That's how we get companies like ExxonMobil having great ESG scores. The Atlantic had a great article about it: "When you invest in an ESG fund, you may think you’re buying into a highly curated selection of positive-outlier companies. In reality, it will often look similar to an ordinary market-wide index fund. The 10 biggest holdings in the S&P 500 ESG index include Big Tech companies such as Apple, Microsoft, and Alphabet; big banks such as JPMorgan Chase; and, incredibly, ExxonMobil." https://www.theatlantic.com/ideas/archive/2023/05/esg-woke-investing-trend-reality/674197/ https://www.theatlantic.com/ideas/archive/2023/05/esg-woke-i...
lowkeyoptimist 3y ago
Partially the politicization of it, but also because it is lumping together three issues that the society cannot even broadly agree one of the issues within 'ESG'. I don't think it is difficult to see why "ESG" is political by its nature.
- tfandango 3y ago
  Thanks this is a nice way of saying what the other poster said :) I agree, ESG is just a bunch of numbers but if we can't agree on what the right output is then it's political in nature. I wonder if society has a bigger issue with disagreements about the E and S rather than the G, maybe not?

ZeroGravitas 3y ago

When they say pollute in the headline, they mean only C02, which makes the headline misleading clickbait even for people who don't understand what the S and G in ESG stand for. > It can very well be that a high-emitting firm is very good at governance or employee satisfaction. There is no strong relationship between employee satisfaction or any of these things and carbon intensity,” Goltz argued. > “Even the environmental pillar is pretty unrelated to carbon emissions,” he added, with this rating partly determined by factors such as a company’s use of water resources and waste management practices. It's amazing how something so utterly unremarkable has already inspired 4 unhinged comments.

TylerE 3y ago
I hate hate hate how pollution has been reduced to co2 and nothing else. Don't have to worry about global warming if contaminated water and soil kill us all first.
- marcosdumay 3y ago
  It's more that the other kinds of pollution are local and most of the world will be quick to fine you or throw you in jail if you start to pollute too much of them.
  - CameronNemo 3y ago
    Hahahahahahaha 3M profitable poison printer go brrrr
b59831 3y ago
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jmholla 3y ago
> for people who don't understand what the S and G in ESG stand for. They stand for Social and (corporate) Governance. I just looked it up myself. I wish these articles would explain that. Even the link on the word ESG is unhelpful.

CameronNemo 3y ago

I think caring about ESG, and especially evaluating a company's governance, is important. But I don't know how much I really want BlackRock and Vanguard to be the ones doing the scoring...

zmgsabst 3y ago
I agree: - caring about your investments aligning with your values is good - investment firms violating civil rights laws and promoting fashionable bigotry using retirement funds to coerce companies into self-destructive behavior is bad
- jquery 3y ago
  Why are you prefixing bigotry with "fashionable"? Seems like a shibboleth. The only "fashionable" bigotry I can think of right now is anti-trans bigotry, but I don't see how that links to the rest of your statement.
  - networkchad 3y ago
    [dead]
  - undefinedland 3y ago
    [dead]
    - jamathon 3y ago
      These type of statements are considered "anti-trans": > people with obvious mental problems akin to anorexia > allow people to invade opposite gender areas such as toilets or sport or any number of other arenas of life > when people ignore reality At least, that's what I've been told when I express similar concerns.
      - undefinedland 3y ago
        [dead]

Eumenes 3y ago

You don't need ESG to practice good corporate responsibility and governance. Carbon credits are a scam. Great interview on this topic by an esteemed NYU professor: https://www.youtube.com/watch?v=vt0C05i7pBs https://www.youtube.com/watch?v=vt0C05i7pBs

legitster 3y ago

Matt Levine: It's Easy to Make Oil Companies ESG: https://www.bloomberg.com/opinion/articles/2023-07-12/it-s-easy-to-make-oil-companies-esg#xj4y7vzkg https://www.bloomberg.com/opinion/articles/2023-07-12/it-s-e...

lofatdairy 3y ago
Was gonna post this. That said, this is not what Levine is writing about. Levine is writing about how you can restructure your portfolio to gain exposure to fossil fuels _without_ lowering your ESG metrics by simply investing in companies with fossil fuel holdings (since then your ESG is calculated by the carbon emissions of the holding firms and not the assets themselves). Here, the authors are essentially concluding that ESG ratings are actually poorly correlated w/ the actual emissions of the firms being rated. This is probably because the environmental metrics of ESG scores are forward-looking (thus you can offset current pollution by aggressive reduction projections), but I'm not in this field so I don't know anything more.
MostlyStable 3y ago
Also, there's evidence that moving investment from polluting to non-polluting industries at best has almost no impact, and potentially makes things worse: https://www.icpmnetwork.com/wp-content/uploads/2023/07/Counterproductive-Sustainable-Investing-the-Impact-Elasticity-of-Brown-and-Green-Firms.pdf https://www.icpmnetwork.com/wp-content/uploads/2023/07/Count...
- FormerBandmate 3y ago
  Europe defunded their oil and gas industry and only great things happened from it. Just ask Ukraine The only way to stop pollution is to consume green. That’s it. The Saudis and the Russians don’t care about ESG
  - deleted 3y ago
    [deleted]
  - brmgb 3y ago

mcpackieh 3y ago

Not really news is it? From two years ago: https://www.bloomberg.com/professional/blog/bp-esg-outlook-solid-as-strategy-pivots-to-transition-emissions/ https://www.bloomberg.com/professional/blog/bp-esg-outlook-s... > BP’s ESG performance and outlook are bolstered by an ambitious net-zero emissions target from its operated upstream production by 2050, complemented by a tenfold surge in green spending, 50 gigawatts of renewable-power generation by 2030 and a 40% decline in oil and gas volume. Ecological metrics are favorable, with significant improvement in the 10 years since the Deepwater Horizon disaster, as BP’s safety and spill records are in-line with or above peer averages. BP’s board is among the most gender-diverse, and it has an investor-friendly governance structure and best-in-class ESG disclosures. So BP, noted exploder of oil rigs in the ocean, gets a boost to their ESG rating by, among other things, promising to do some shit 30 years from now (a promise doubtlessly worth less than the paper it was written on), and hiring more women. What do either of those have to do with BP's actual emissions impact? ESG exists to rehabilitate the reputations of companies like this.

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ClumsyPilot 3y ago
> investor-friendly governance structure This point is actually reasonable - a poorly governed company is a risk. Like if a single, unreadonable owner is prone to throwing hissy fits, ridking money in poorly thoigh out schemes and firing people because he woke up on the wrong side of the bed. Then thats a riskier investment.
- mcpackieh 3y ago
  You're missing the forest for the trees.

psychphysic 3y ago

ESG is a waste of time, I can't wait until this fad dies down.

Aerroon 3y ago
When I first read about it I thought someone was playing an elaborate joke. It makes no sense why such ephemeral concepts should somehow lead to better investments. If anything, the entire ESG score thing seems like a scam to get people to make bad investments and to then bet against those investments.
- ke88y 3y ago
  > It makes no sense why such ephemeral concepts should somehow lead to better investments. Each component alone makes sense, if interpreted in a way that is consistent with shareholder capitalism. 1. Environmental. Interpreted in terms of shareholder capitalism, Environmental might mean something like "how well does this company work as a hedge against increasingly likely tail risks, and how resilient will it be to policy changes should those increasingly common tail risks result in secular or policy shifts". E.g., a re-insurance company that is well-positioned WRT coastal flooding risk but which runs all of its offices on artisanal coal-fired powerplants -- that are a cheap and easy to replace with solar if and when needed -- should have a higher "Environmental" score than a "net zero" re-insurance company that is highly exposed to coastal flooding risk. 2. Social. Interpreted in terms of shareholder capitalism, Social should mean that middle management is not eg over-paying for labor from the Good Old Boys network instead of taking advantage of the cheapest available labor that meets quality requirements. 3. Governance. Interpreted in terms of shareholder capitalism, Governance might mean that you don't give a single founder or board member the ability to over-ride the preferences of the majority holders of equity. Also things like decisions being transparent to shareholders and so on. The joke isn't ESG per se. The joke is that ESG as implemented makes the completely idiotic assumption that shareholder capitalism can do anything at all to solve political fissures or account for externalized costs.
  - Aerroon 3y ago

grej 3y ago

I'm reminded of Goodhart's law https://en.wikipedia.org/wiki/Goodhart%27s_law https://en.wikipedia.org/wiki/Goodhart%27s_law "When a measure becomes a target, it ceases to be a good measure."

XorNot 3y ago
I feel like the corrollary to that would also be that measures invariably become targets over a long enough timespan.

nerdo 3y ago

Indulgences didn't signal much beyond what people paid the DNC^H^H^Hchurch platform either.

distant_hat 3y ago

Often companies with good ESG scores optimize for having good scores. Its like studying to the test and they may have particularly poor results outside of the test that they have studied for. Also, ESG is political and like all things that involve politics, many things that may be good for the score may be bad for the environment. Easiest example to see is in energy with things like nuclear power, and 'biomass' and coal.

water9 3y ago
Nuclear power if done safely is a much better alternative than say windmills which require extensive mining to make and kill thousands of birds a year.
- maigret 3y ago
  You’ll hate cats then https://www.statista.com/chart/15195/wind-turbines-are-not-killing-fields-for-birds/ https://www.statista.com/chart/15195/wind-turbines-are-not-k...
  - genericone 3y ago
    You'll hate statistics even more: https://www.npr.org/sections/13.7/2013/02/03/170851048/do-we-really-know-that-cats-kill-by-the-billions-not-so-fast https://www.npr.org/sections/13.7/2013/02/03/170851048/do-we...
    - magicalist 3y ago
      That's not statistics, though? That's "we think there are fewer ownerless cats in the world than the authors do". > We don't quarrel with the conclusion that the impact is big, but the numbers are informed guesswork. Meanwhile the author outright says they're writing this opinion piece because they don't want to see cats banned as pets or people going out and killing a bunch of cats.
  - polski-g 3y ago
    Cats kill 2.4b birds a year? Buildings kill 600m? These numbers are completely unbelievable. Were the made up in a left-wing think tank staffed entirely by birds?

im3w1l 3y ago

If you squint a bit, you can see some parallels to the AI alignment issue. Like it's clearly important to align AI, but what exactly should we align it to? How do we come up with one score that measures goodness? And it turns out that if you get the score just a tiny bit wrong, it can lead to big issues and people hating it so much they wish there wasn't any score at all.

throwaway106382 3y ago

ESG isn't about actual results, it's about controlling the culture.

dundarious 3y ago
It's a cynical cash grab, meant to make companies look good, and give Joe Public the impression that "positive change is happening", when 1. It is not, 2. Some change is happening, but what little there is, is mostly negative (implicit bias training rackets, etc.) But it is primarily a racket. You don't need an ideology or a program for societal control to have a good racket -- in fact, it's best not to have one, so you can cynically jump onto the latest thing for this business cycle. So I disagree with you completely, despite being strongly critical of the ESG phenomenon. This is a pretty popular position BTW. Many ESG critics (probably such as yourself) are in a bubble, as they think people such as myself are supportive of ESGs just because they are left-wing, when to most left-wingers, it's yet another example in a long history of greenwashing. Only people in on the racket are for it: McKinsey types, CEOs, fund managers that are worried about activist investors such as Norway's Sovereign Wealth Fund, etc.

filecounter 3y ago

Hard to 'believe' in ESG/DEI when the rich continue to fly private jets and a black scientist has never won a nobel prize.

HDThoreaun 3y ago
> a black scientist has never won a nobel prize. This is the entire point of DEI. As Kendi says, the only way to undo past racism and become an equal society is a period of short term discrimination against the privileged. Not saying I agree, but a Nobel is basically a career achievement and dei has been around for what, a decade? Would be surprising if it already lead to a Nobel.
- filecounter 3y ago
  'Diversity' started as an anti-semitic agenda in the 1920's in order to limit the number of Jewish students at Harvard. https://www.timesofisrael.com/harvards-jewish-quotas-cited-in-us-supreme-courts-affirmative-action-ruling/ https://www.timesofisrael.com/harvards-jewish-quotas-cited-i... .
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rhaway84773 3y ago

The whole ESG discussion is fraught with misinformation. Different ESG scores mean different things depending on what scoring you’re looking at. So, for example, an environmentally focused organization may rate a company high in ESG because they have low emissions and/or push for green legislation. However, the more well known ESG scores that we see in the news are often from the financial press and are intended for investors, and often reflect the ESG risk exposure for the companies in question. This tends to have the ironic effect of making environmentally friendly companies have low ESG scores, and less environmentally friendly companies high scores. So, for example, Elon Musk complained about getting a low ESG risk score from S&P, but that made complete sense because Tesla was heavily exposed to governmental green policies. Remove CA’s CARB credits, or various green credits and tax benefits, etc and Tesla’s business would suffer. Exxon, OTOH, was unlikely to see any such impact leading to a lower ESG risk score. The key thing to understand is that there is no single ESG score. Every company creates different scores based on different factors and intended for different purposes, and their customers decide which ones are effective for their intended purposes and those scores tend to last and do well. The political backlash against ESG scores is so misplaced. It’s the equivalent of a personal wealth guru who believes that credit cards are not good for most poor people because they perpetuate their poverty deciding that therefore credit ratings for companies are bad, because both have something to do with the borrowing and lending of money.

JumpinJack_Cash 3y ago
> > The political backlash against ESG scores is so misplaced. Rating agencies should rate the financial risk of stuff (mostly bonds they should try and do it well given that whole mess they created in 08) They should not be involved in politics. When a rating agency goes beyond number crunching and they start looking at other stuff they are already out of their role. When they start looking at the number of women on the board that is preposterous. Same is true for Fitch, Moodys, Bloomberg etc. Everybody wants to be a politician and a virtue signaler these days...too bad that in a country full of politicians and virtue signalers nobody does any actual work.
- ClumsyPilot 3y ago

silisili 3y ago

ESG is nothing more than making companies kowtow to Blackrock. Kiss that ring, companies, and maybe they'll throw a few crumbs at you.

gitfan86 3y ago

ESG is such a obvious scam. It would be like this: Wife: Have you been cheating on me? Husband: Lets check my APS score. Wife: What? Husband: Adultery, Pushups and Soccer Watching score. Looks like I'm in the 1% of husbands as calculated by the experts. So I don't think you have anything to worry about.

Ygg2 3y ago
Just offset CO2 emissions by hiring more diverse staff from New York. Brilliant! How come Fossil fuel industry never thought of that?
- foderking 3y ago
  lmfao
- RcouF1uZ4gsC 3y ago
  Actually, they did https://www.investors.com/news/esg-companies-list-top-100-esg-stocks-2022/ https://www.investors.com/news/esg-companies-list-top-100-es... ConocoPhillips and Exxon Mobil are one the list along with a trucking company at number 2 and various other oil companies.
  - ornornor 3y ago
    In the same vein, a major bottled water (plastic bottles) company (Volvic) draining local water sources is a B-Corp where I live… So is Nespresso.
  - atonse 3y ago
    Here’s a funny thing, if oil companies technically powered their refineries with renewable energy, would they be some of the most green companies out there?
smfjaw 3y ago
offset your cheating (emmissions) by buying adultery (carbon) credits

gnicholas 3y ago

A very interesting podcast on the topic, arguing that it doesn't make sense to divest from industries that pollute in favor of those that don't pollute — even if your goal is to reduce pollution: https://freakonomics.com/podcast/are-e-s-g-investors-actually-helping-the-environment/ https://freakonomics.com/podcast/are-e-s-g-investors-actuall...

DevKoala 3y ago

The funny thing is that the Environmental metric is the only objective one while the Social and Governance ones can be bullshitted and manipulated. Those three things should have never been coupled. It’s all a scam.

gnramires 3y ago
I dunno, I think it could be combined in smarter ways, e.g. min(E,S,G) (or some kind of soft-min)[1]. Or give different weights for more uncertain measures. I think there's a very large amount of knowledge (in various fields) around evaluating those things, and we could have much more if we put some effort; also, we don't necessarily need to make everything 100% based on a small set of metrics. You could have some kind of adaptive evaluation that tries to find the most impactful events for that organization (e.g. trying to track down pollutants and quantify their impact, trying to track down social impacts and quantify them, etc.). In medical and charity fields for example there is QALYs (which do have serious problems still!), but are at least a reference point for impact -- to given an example; in comparing development we have HDI; etc.. Overall, I think trying to improve those things in a systematic way is the only real way to improve them. I want to know how well each company is doing in various areas. We are currently mostly blind to that. And we should be mindful not to let the ones trying to game and undermine the systems win, and sincerely look at impact in all areas. [1] Ideally, I think a metric would be able to measure something like a 'meaning of life difference' from different choices (and assign a corresponding metric for say an organization based on certain counterfactuals). Of course that's too difficult in general, but we can strive for example to keep the planet healthy and establish some standard "unit" for a healthy society (could be translated to money, but there could be some issues with that), establishing a trade-off say between say saving someone's life now (through a health intervention), and saving lives in the future by improving planetary conditions (with less pollution). Those things are perhaps surprisingly comparable (and surprisingly linear/additive as well). There are mentions of Goodhart's Law and it certainly applies somewhat (if we tried simple, naive metrics): but Goodhart's Law doesn't apply when there are real, smart people doing the evaluation, in a dynamic way, using quantitative tools sensibly. And finally there are choices perhaps no such evaluation could capture, questions about what future do we want for ourselves in a broader cultural and artistic sense (which is why in the end freedom to support what you want as an individual is important). I really think this is going to play a significant part in how we address many large scale issues!

archsurface 3y ago

I thought I wouldn't comment on this because saying it's a scam would just get me downvoted regardless of how I present it - colour me surprised, it seems to be comfortably the majority sentiment.

roody15 3y ago

Yes because these companies just do the math… hmm being truly environmentally friendly is tough for maximizing profits… hmm okay let’s just do a bunch of corporate safe political progressive posturing and marketing on everything else to off-set the E score. So a non-union mega corp that exploits labor in third world countries gets a decent overall ESG score by making a big show of support of gay/trans or “diversity” goals. It’s math .. and the bottom line and honestly nonsense.

rationalfaith 3y ago

[dead]

westurner 3y ago

From https://www.ft.com/content/b9582d62-cc6f-4b76-b0f9-5b37cf15dce4 https://www.ft.com/content/b9582d62-cc6f-4b76-b0f9-5b37cf15d... : > Keeran Beeharee, vice-president for ESG outreach and research at Moody’s, agreed that ESG investment does not necessarily help an investor create a low-carbon portfolio, or any other specific goal. > “[There is a] perception that ESG assessments do something that they do not. ESG assessments are an aggregate product, their nature is that they are looking at a range of material factors, so drawing a correlation to one factor is always going to be difficult,” Beeharee said. > “In 2015-16, post the SDGs [UN sustainable development goals] and COP21 [Paris Agreement], when people began to really focus on the issue of climate, they quickly realised that an ESG assessment is not going to be much use there and that they need the right tool for the right task. There are now more targeted tools available that look at just carbon intensity, for example,” he added. Emission intensity includes CO2 (Carbon Intensity) and also Methane and other emissions. Emission intensity: https://en.wikipedia.org/wiki/Emission_intensity https://en.wikipedia.org/wiki/Emission_intensity UN SDG Indicators 2023 revision (Goals, Targets, Indicators) https://unstats.un.org/sdgs/indicators/Global%20Indicator%20Framework%20after%202023%20refinement_Eng.pdf https://unstats.un.org/sdgs/indicators/Global%20Indicator%20... ctrl-f "carbon", "emission", "methane" > Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation > 9.4.1 CO2 emission per unit of value added > Goal 13. Take urgent action to combat climate change and its impacts > 13.2.2 Total greenhouse gas emissions per year SDG9 > "Target 9.4: Upgrade all industries and infrastructures for sustainability": https://en.wikipedia.org/wiki/Sustainable_Development_Goal_9#Target_9.4:_Upgrade_all_industries_and_infrastructures_for_sustainability https://en.wikipedia.org/wiki/Sustainable_Development_Goal_9... SDG13 > "Target 13.2: Integrate climate change measures into policy and planning": https://en.wikipedia.org/wiki/Sustainable_Development_Goal_13 https://en.wikipedia.org/wiki/Sustainable_Development_Goal_1... How should ESG composite scores be updated to reflect Emission intensity (to include CO2, and CH4,) as a weighted factor?

nologic01 3y ago

ESG is a deeply problematic concept but a world without any "esg" concerns at all is a terminal world with an expiry date fairly close. So the positive attitude is to see the glass as 5% full rather than 95% empty and see what could be the next step. Unbundling the acronyms is the obvious first concern. They smack of a kitchen sink approach to everything the corporate thinks is a reputation risk. As factors they have no internal coherence. Then, for each of the underlying issues one must clarify and distinguish whether it is an assessment of current state of the world or future risks (and to whom, what? earnings, value, reputation, clients, mother earth etc). Finally, even in the most tractable case (accounting for current co2 emissions, which is a tiny fraction of environmental footprint and says nothing about the future) there is a mountain of methodological challenges to climb: Who is emitting, who is enabling it, who is demanding it, who benefits most etc. The modern economy is a giant hairball of dependencies yet we like to ignore all that. The "ESG period" of the sustainability transition is the financial system taking a first peek at the actual state of the world as opposed to "the number goes up". Its no surprise that many just want to close the lid and pretend they never saw anything. But its not possible unless we accept we are an amoral last generation that devolves into a madhouse. It took credit ratings a century to mature and they are still heavily gamed / leading to systemic crises. What makes you think this existential question for the unhinged corporate profit-focused entities that dominate modern economic life will get resolved any sooner? There is a long, long road ahead. But if you look for purpose look no further.

otabdeveloper4 3y ago

Indulgences don't make you sin less? Who would have thought!

jnsaff2 3y ago

ESG is about how sustainable the COMPANY (stock price) is when looking from those three aspects i.e is it a safe investment to not lose your pension in it. The survivability of everything around it is not to say irrelevant but at least a few steps removed. So it tries to assess whether your money is still there, not the planet. Obviously the marketing tries to make you believe that it’s about the planet.

jnsaff2 3y ago
So it looks at how well the company is prepared to do when the climate changes (mostly by having written some plans). It does not care much about what the company actions do to the world.
- jnsaff2 3y ago
  In short: ESG measures the worlds impact on the company NOT the company's impact on the world. Better ESG score means company is more resilient to change in those factors.
  - Gareth321 3y ago
    > In short: ESG measures the worlds impact on the company NOT the company's impact on the world. This is not correct. ESG tracks, among others, the carbon output of a business. In other words, the impact of the business on the world. You can read more here: https://www.pwc.com/ca/en/today-s-issues/environmental-social-and-governance/measure-esg-performance.html https://www.pwc.com/ca/en/today-s-issues/environmental-socia...
    - jnsaff2 3y ago
      So I did look at the report you linked. It's very high level and sparse .. even then the only references to emissions reductions (including carbon) were pretty much: "company must adhere to laws and regulations and must take into account the future emissions reductions that are governmental targets" (paraphrasing).' I don't see how this is different from what I said. It does not rate how environmentally friendly the company is, it rates whether the company is in compliance with current and it has plans future regulations. Edit: there is carbon emissions section that is helpfully labelled as one of the things that "CAN be tracked". So this seems to be optional and also the benchmark seems to be self determined by the company rated.

gmerc 3y ago

Shocking, the metric becomes the goal. It’s like working at Meta.

iamflimflam1 3y ago

Lots of the comments I’m reading really indicate how well the political campaign against ESG has worked. Lots of knee jerk comments without much actual analysis and thinking. Most of the commentators aren’t even aware what E, S and G stand for (environmental, social governance).

undefinedland 3y ago
Equally, one might say that you don't know how the world works and how these scores will be governed by the few to get power over the many.
- iamflimflam1 3y ago
  No one is forcing you to make decisions based on ESG. There are fund that invest based on ESG. Equally there are funds that don't. You can also buy whatever stocks and shares you want. ESG does not prevent companies from listing. If you don't want to invest based on ESG then don't.
  - undefinedland 3y ago
    Not yet they aren't; wait until governments or other highly influential organisations such as banks decide to direct pension funds and the like to invest only according to certain ESG profiles and give individuals a convoluted and difficult option if they wish to "opt out". If these concerns people have about ESG are so important, they should be passed at the democratic level via legislation. At least that way, people could debate and change the system as needed. You didn't need ESG to get rid of lead plumbing - just an interested government. Of course these days, we can only have private power, not public power.
fallingknife 3y ago
This is also a knee jerk comment that contains no actual analysis and thinking

klipklop 3y ago

I’ll likely get downvoted, but ESG is a way for finance/banking to punish companies that don’t align with their politics. My favorite part about the whole thing is how it went from “conspiracy theory that will never actually be implemented” to I have to do ESG training at work within a few years.

LatteLazy 3y ago

People keep making tiny or zero progress. Then holding parties and acting like the problem is solved. Then getting shocked when it isn't. ESG is nice, but it doesn't cure everything, at best it helps empower some people trying to do good. You should not expect it to "work" on a large, statistically significant scale. It was never going to. The Paris accord is another example: it was an agreement to all just do our own thing and only what we want. So obviously nothing has been achieved. People really struggle with the idea that something small is not everything...

lloydatkinson 3y ago

I was briefly involved in some ESG stuff. I echo similar sentiment here; mostly a scam or at best nonsensical and just another box checking exercise.

Blackstrat 3y ago

ESG makes Larry Fink and the rest of the globalist cabal happy. It's much like a magician's sleight of hand, pay attention to our score and ignore what we're really doing.

FooBarBizBazz 3y ago

I was trying to think of an alternative, which the bankers could do, if they wanted, which would be narrowly focused on climate change. Like ESG, the idea is that it's something big financial actors can do without getting government on board. First thought: Just bid up the price of oil. Make it too expensive for the refiners. Drive gasoline up to $50/gallon. Every drop on the market, just buy up and do not burn. There is an issue with this, of course, which is that it still (hugely) incentivises extraction. You don't want to have to physically store the stuff. But you also can't pay for notional oil left underground: "Yeah, trust us, we didn't sell that barrel to somebody else for additional money." Second thought: You could subsidize the hell out of a substitute though, thereby killing demand. Investors poured money into Uber at a loss just so it could eat up market share, right? Why can't you do that with solar panels and electrification? (Where's my electric car paid for by the Saudi Sovereign Wealth Fu... oh.) You can even create network/lockin effects: Electric cars cost half the price, so everybody buys one, so gas stations go out of business. These are very expensive strategies, but they seem to directly use the price mechanism to try to achieve your goals. Is something cheaper and more efficient possible? Something about efficient markets would seem to imply that that isn't possible, to the extent that efficient markets exist... Idea 3: Continuing brainstorming -- - Naked-short futures for beachfront lots in Florida and Bangladesh? - Buy (underpriced) insurance (basically PUTs) on same? I feel a creative finance person could come up with lots of things.