It was a bad May for greenwashing. On the 31st, German police raided Deutsche Bank and its asset management group DWS over accusations that they fudged their Environmental, Social and Governance (ESG) credentials. On May 25, the SEC proposed new rules that would require ESG funds to disclose their goals, criteria and strategies along with data measuring ESG progress. Two days earlier, the SEC fined BNY Mellon $1.5 million for “…Misstatements and Omissions Concerning ESG Considerations.”
Last but not least, on May 18 S&P Global kicked Tesla
TSLA
For most ESG funds it is all about the money, hardly about the green.
Of course, Elon Musk tweeted in response to S&P Global’s decision: “ESG is a scam. It has been weaponized by phony social justice warriors.” While I empathize with Elon (not always easy to do…), I think his diagnosis of the problem is too simplistic.
While the intention of ESG investing is good and should be applauded, investors are right to wonder: is ESG a scam? Unfortunately, the answer is often yes. From Blackrock whistleblower Tariq Fancy to finance professor Sanjai Bhagat, critics have been making that case for years (as have I).
However, I don’t think “social justice warriors” have commandeered ESG…
