The FAKE Representation of Environmental, Social and Governance investing (ESG)
Companies with strong 'ESG' credentials do so to represent a certain set of 'investment attributes'.
A single phrase sums up the appeal of Environmental, Social and Governance investing: “doing well by doing good”. ESG strategies, we are told, promote the greater good and provide superior long-term financial performance.
It is true that at some point in the indefinite future, the social good and financial interests must converge.
There are no investment returns at all on a planet left uninhabitable by climate change!
But that is not the time horizon individual investors operate over (they might have just 20 years between acquiring significant assets to invest and retiring). And it is far beyond any corporation’s planning horizon.
But of course it is the goal of the ESG movement to push investors away from “wicked” portfolios — making their prices cheap, and setting them up to outperform “virtuous” portfolios over time! This pitch is a fallacy. Quite often investors choose between their values and their bank account.
None of this suggests that investors should not put their savings behind the things that they care about. It means only that they should not think of this only as a wealth maximizing strategy. Indeed, accepting the possibility of lower returns in return for the promise of positive social outcomes, such as a healthier environment and less poverty, can make a positive impact by putting resources to work where an “efficient” market would not, providing subsidized capital to projects that are very risky but could have a big upside for society.
Society receives no benefit, however, from the ESG story. The ESG ‘factor’ promoted by 'fund managers' only helps fund managers sell products and companies polish their reputations while avoiding making the necessary changes to implement real changes in climate and societal issues.
Follow your values.
Note: MLGM does not operate for the benefit of corporate interest’s…we operate for the sole purpose of Climate Unity & Social Unity. All MLGM products and services are geared towards accomplishing these goals.
We have a set of guidelines that we want our member’s, customer’s, investor’s, and business partners to review and comply with before joining or using our services.
- I do not own or operate an animal slaughtering, butchers, or animal processing business.
- I am not involved in the business of Deforestation.
- I am not an executive of a fossil fuel company.
- I am not a registered lobbyist.
- I am not an executive of a health insurance or pharmaceutical company.
- I am not an executive of a big tech company.
- I am not an executive of a big bank.
- I am not an executive of a private equity firm.
- I am not an executive of a hedge fund.
- I am not an executive at an *agribusiness company.
*Agribusiness commonly degrades the soil, depletes it of carbon, reduces its water-holding capacity, poisons the land, pollutes waterways and the ocean, and produces polluted, homogenised food of inferior quality. In Asia it destroys communities and displaces people into vast city slums where they become cheap labour.