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Interesting spin: the reaction to the "environment, social and governance (ESG) investment trend." is the "infection", and the change. The "ESG trend" itself is

Interesting spin: the reaction to the "environment, social and governance (ESG) investment trend." is the "infection", and the change. The "ESG trend" itself isn't another example of ideology driven investing to talk about.

belval 3y ago
Especially considering the number of "Petrol company is in ESG but Tesla is not" type of articles that we've seen in the last +5 years. The reality is ESG is just another gamed metric, if you want to do ethical investing that's probably not the best way.
- Spivak 3y ago
  I mean I guess but I don't think I would ever expect a Musk company to meet the bar for the S or G in ESG. I mean it's nothing personal but Musk is one of biggest figureheads championing against DEI and that and more is pretty much the S. Am in no way saying that a gas company should be included but the exclusion makes sense.
  - belval 3y ago
    > Against DEI and that and more is pretty much the S. I think that's part of why people are disillusioned, because ESG lumps several incomparable verticals and quantitatively rank them. A slightly flippant reading could be "How many kilo-tons of emitted CO2 is a 50/50 man to woman split in the workforce worth?" because that's pretty much how these are ranked.
    - Spivak 3y ago
      I mean that is a central question for ESGs and the answer is that different people choose different weights. I mean Tesla was kicked off of the S&P 500 ESG index for their own reasons but that's just one of many indexes one of many scoring systems. It's not like they're all one thing.
  - slily 3y ago
    This doesn't address the contradiction. The fact that a CEO's sociopolitical views take precedence over the impact of the actual company is exactly why ESG is a cancerous tool for political activism that should not be taken seriously by ethically-minded investors. (Kind of like DEI actually since you brought that up.)
    - Spivak 3y ago
      It sounds like ESGs aren't for you then, or at least you want an index that is almost entirely weighted on E scores. > take precedence over the impact of the actual company Either you think that social (and to a lesser extent governance) impact is impact or you don't and that will pretty much decide how you view ESGs. It's not as if Elon is ranting in a vacuum where those views don't manifest in real effects in the companies he owns and the wider political sphere. Regardless of how you feel about how S scores as they're currently measured and their worth as an ethical north star Musk companies don't get very many marks. And that's fine -- I think that's the point, it seems very purposeful. It seems that Elon only actually cared when that fact hurt his stock price, not on principle. And I'm sure investing in 1789 Capital will skew the other direction and that's fine too. You won't hear me saying their indexes are illegitimate because they do what it says on the tin.
      - slily 3y ago
        Elon Musk got the stick for being outspoken and disagreeing with elements of a quasi-religious ideology (disregarding his further radicalization following that event). ESG doesn't "do what it says on the tin", there would be no significant backlash if it did. And it's just ridiculous to claim that mean tweets from a CEO outweigh the huge environmental impact of Tesla to the point that Exxon is/was ranked higher by ESG metrics. This absurd gaslighting and word-twisting does not work anymore which is why ESG, DEI and the like are being rejected.
nix0n 3y ago
ESG itself isn't new. To pick on Environment specifically, according to [0] fossil fuel divestment campaigns have been around for over a decade now. It's also not really American politics: concern for the global environment is a global movement. Most Western democracies have significant environmental planks in the platforms of whichever party is furthest left, and/or a whole Green Party. Anti-environmentalism exists as more of a USA political movement, although it's starting to bleed into other countries (and into the financial world). Happy Earth Day! [0] https://en.wikipedia.org/wiki/Fossil_fuel_divestment https://en.wikipedia.org/wiki/Fossil_fuel_divestment
- ronsor 3y ago
  Most criticisms of ESG don't have anything to do with the environment aspect (unless we're dragging in the "carbon credits" scam), so I'm not sure if it's worth picking for an example.
- mfb 3y ago
  So-called socially-responsible investing has been around at least since the 1970s, when anti-Apartheid mutual funds were launched. It seems like the main change with ESG is that larger firms have adopted the concept, with lower fees/expense ratios.
javanissen 3y ago
The Economist has published several critiques of ESG investing: - ESG is overbroad and contradictory, and funds that select investments solely based on emissions criteria would serve investors better [0] - ESG is ineffective because it is rife with greenwashing [1] - ESG is fundamentally unable to accomplish meaningful progress on social goals because profit-seeking will always take precedence in corporations [2] I don’t think every ESG-related piece they publish needs to include a lengthy disclaimer that the publication itself doesn’t love ESG, just as their critiques of ESG don’t need to include disclaimers about the downsides of boycotting firms that offer ESG products, as mentioned in the article: > Taking a stand can be expensive. Researchers at the Federal Reserve and the University of Pennsylvania have found that anti-ESG boycotts raised the cost of borrowing for Texan municipalities by $300m-500m as banks with ESG policies withdrew from underwriting bond sales. [0] https://www.economist.com/leaders/2022/07/21/esg-should-be-boiled-down-to-one-simple-measure-emissions https://www.economist.com/leaders/2022/07/21/esg-should-be-b... [1] https://www.economist.com/leaders/2021/05/22/sustainable-finance-is-rife-with-greenwash-time-for-more-disclosure https://www.economist.com/leaders/2021/05/22/sustainable-fin... [2] https://www.economist.com/leaders/2022/09/29/the-fundamental-contradiction-of-esg-is-being-laid-bare https://www.economist.com/leaders/2022/09/29/the-fundamental...

belval 3y ago

Especially considering the number of "Petrol company is in ESG but Tesla is not" type of articles that we've seen in the last +5 years. The reality is ESG is just another gamed metric, if you want to do ethical investing that's probably not the best way.

Spivak 3y ago
I mean I guess but I don't think I would ever expect a Musk company to meet the bar for the S or G in ESG. I mean it's nothing personal but Musk is one of biggest figureheads championing against DEI and that and more is pretty much the S. Am in no way saying that a gas company should be included but the exclusion makes sense.
- belval 3y ago
  > Against DEI and that and more is pretty much the S. I think that's part of why people are disillusioned, because ESG lumps several incomparable verticals and quantitatively rank them. A slightly flippant reading could be "How many kilo-tons of emitted CO2 is a 50/50 man to woman split in the workforce worth?" because that's pretty much how these are ranked.
  - Spivak 3y ago
    I mean that is a central question for ESGs and the answer is that different people choose different weights. I mean Tesla was kicked off of the S&P 500 ESG index for their own reasons but that's just one of many indexes one of many scoring systems. It's not like they're all one thing.
- slily 3y ago
  This doesn't address the contradiction. The fact that a CEO's sociopolitical views take precedence over the impact of the actual company is exactly why ESG is a cancerous tool for political activism that should not be taken seriously by ethically-minded investors. (Kind of like DEI actually since you brought that up.)
  - Spivak 3y ago
    It sounds like ESGs aren't for you then, or at least you want an index that is almost entirely weighted on E scores. > take precedence over the impact of the actual company Either you think that social (and to a lesser extent governance) impact is impact or you don't and that will pretty much decide how you view ESGs. It's not as if Elon is ranting in a vacuum where those views don't manifest in real effects in the companies he owns and the wider political sphere. Regardless of how you feel about how S scores as they're currently measured and their worth as an ethical north star Musk companies don't get very many marks. And that's fine -- I think that's the point, it seems very purposeful. It seems that Elon only actually cared when that fact hurt his stock price, not on principle. And I'm sure investing in 1789 Capital will skew the other direction and that's fine too. You won't hear me saying their indexes are illegitimate because they do what it says on the tin.
    - slily 3y ago
      Elon Musk got the stick for being outspoken and disagreeing with elements of a quasi-religious ideology (disregarding his further radicalization following that event). ESG doesn't "do what it says on the tin", there would be no significant backlash if it did. And it's just ridiculous to claim that mean tweets from a CEO outweigh the huge environmental impact of Tesla to the point that Exxon is/was ranked higher by ESG metrics. This absurd gaslighting and word-twisting does not work anymore which is why ESG, DEI and the like are being rejected.

nix0n 3y ago

ESG itself isn't new. To pick on Environment specifically, according to [0] fossil fuel divestment campaigns have been around for over a decade now. It's also not really American politics: concern for the global environment is a global movement. Most Western democracies have significant environmental planks in the platforms of whichever party is furthest left, and/or a whole Green Party. Anti-environmentalism exists as more of a USA political movement, although it's starting to bleed into other countries (and into the financial world). Happy Earth Day! [0] https://en.wikipedia.org/wiki/Fossil_fuel_divestment https://en.wikipedia.org/wiki/Fossil_fuel_divestment

ronsor 3y ago
Most criticisms of ESG don't have anything to do with the environment aspect (unless we're dragging in the "carbon credits" scam), so I'm not sure if it's worth picking for an example.
mfb 3y ago
So-called socially-responsible investing has been around at least since the 1970s, when anti-Apartheid mutual funds were launched. It seems like the main change with ESG is that larger firms have adopted the concept, with lower fees/expense ratios.

javanissen 3y ago

The Economist has published several critiques of ESG investing: - ESG is overbroad and contradictory, and funds that select investments solely based on emissions criteria would serve investors better [0] - ESG is ineffective because it is rife with greenwashing [1] - ESG is fundamentally unable to accomplish meaningful progress on social goals because profit-seeking will always take precedence in corporations [2] I don’t think every ESG-related piece they publish needs to include a lengthy disclaimer that the publication itself doesn’t love ESG, just as their critiques of ESG don’t need to include disclaimers about the downsides of boycotting firms that offer ESG products, as mentioned in the article: > Taking a stand can be expensive. Researchers at the Federal Reserve and the University of Pennsylvania have found that anti-ESG boycotts raised the cost of borrowing for Texan municipalities by $300m-500m as banks with ESG policies withdrew from underwriting bond sales. [0] https://www.economist.com/leaders/2022/07/21/esg-should-be-boiled-down-to-one-simple-measure-emissions https://www.economist.com/leaders/2022/07/21/esg-should-be-b... [1] https://www.economist.com/leaders/2021/05/22/sustainable-finance-is-rife-with-greenwash-time-for-more-disclosure https://www.economist.com/leaders/2021/05/22/sustainable-fin... [2] https://www.economist.com/leaders/2022/09/29/the-fundamental-contradiction-of-esg-is-being-laid-bare https://www.economist.com/leaders/2022/09/29/the-fundamental...