Recent geopolitical events have some Americans blaming environmental, social and governance investing for everything from the high price of oil to the invasion of Ukraine. This is a legitimate concern, as it appears the very essence of what’s good for the world is changing before our very eyes. It is, after all, oil the world now covets, and it’s the high demand for it that is fueling Russia’s invasion (put aside the sky-high prices we’re paying at the pump).
Are ESG investors wrong to demand cleaner energy practices from public companies? Are they wrong to demand tighter gun controls in the United States when we’re sending lethal weapons to Ukraine? Like most things in life, the answers are nuanced.
I’m the author of a book dedicated to ESG investing and a partner of a wealth management firm that recently launched an ESG platform—one that’s seen inflows of nearly $50 million in 18 months. So these questions of course pique my interest. More importantly, I find myself wondering if ESG investing is really helping society or if it’s simply a giant marketing scam that has been “weaponized by phony social justice warriors” (or behemoth financial institutions charging higher fees). That’s what Elon Musk said about the space when his electric car manufacturer, Tesla, was kicked out of the S&P 500 ESG index.
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