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ESG is not about how you expect the future to play out, but how you want it to play out. Insofar as reality contradicts our hopes and wishes, as it is prone to

ESG is not about how you expect the future to play out, but how you want it to play out. Insofar as reality contradicts our hopes and wishes, as it is prone to do, there should be some opportunity here.

bryanlarsen 3y ago
Do you want to invest in businesses that aren't sustainable or have bad governance? I think the idea behind ESG is that it gives you an insight into things that make a particular stock a bad long-term investment.
- incrudible 3y ago
  Why would the proxies that ESG uses to determine "bad governance" or "unsustainability" be any better than the ones the market comes up all by itself? Moreover, voluntarily internalizing externalities such CO2/environmental costs (beyond what is mandated by regulation) is likely to be a detriment to profitability, which is why the market can't solve that on its own in the first place.
  - bryanlarsen 3y ago
    ESG consultants have more access to more information than is available to investors.
  - blitzar 3y ago
    Why would the proxies used to determine "S&P 500 Tech Index" outperform the "S&P 500" any better than the ones the market comes up all by itself?
bee_rider 3y ago
I don’t think most people can separate those things out, really. Our descriptions of how we want the future to play out are our descriptions of how we expect the future to play out, under the assumption that the whole system doesn’t come collapsing down (rendering investments moot).
- abeppu 3y ago
  > Our descriptions of how we want the future to play out are our descriptions of how we expect the future to play out This doesn't seem right to me at all. I want a lot of things I don't expect: abolition of the electoral college, a carbon tax which reasonably approximates the actual costs and damages caused by emissions, US single-payer healthcare, a really huge increase in home construction, elder-care nursing robots by the time my parents need them, etc etc.

bryanlarsen 3y ago

Do you want to invest in businesses that aren't sustainable or have bad governance? I think the idea behind ESG is that it gives you an insight into things that make a particular stock a bad long-term investment.

incrudible 3y ago
Why would the proxies that ESG uses to determine "bad governance" or "unsustainability" be any better than the ones the market comes up all by itself? Moreover, voluntarily internalizing externalities such CO2/environmental costs (beyond what is mandated by regulation) is likely to be a detriment to profitability, which is why the market can't solve that on its own in the first place.
- bryanlarsen 3y ago
  ESG consultants have more access to more information than is available to investors.
- blitzar 3y ago
  Why would the proxies used to determine "S&P 500 Tech Index" outperform the "S&P 500" any better than the ones the market comes up all by itself?

bee_rider 3y ago

I don’t think most people can separate those things out, really. Our descriptions of how we want the future to play out are our descriptions of how we expect the future to play out, under the assumption that the whole system doesn’t come collapsing down (rendering investments moot).

abeppu 3y ago
> Our descriptions of how we want the future to play out are our descriptions of how we expect the future to play out This doesn't seem right to me at all. I want a lot of things I don't expect: abolition of the electoral college, a carbon tax which reasonably approximates the actual costs and damages caused by emissions, US single-payer healthcare, a really huge increase in home construction, elder-care nursing robots by the time my parents need them, etc etc.