ESG investing — which takes environmental, social and corporate governance factors into account — is the fastest-growing slice of the asset management pie. If you’re an investor, you can evaluate companies one by one or you can put your money into ESG funds, which supposedly comprise companies that are ahead of their peers on these issues.
But the ESG label has come under criticism, with allegations of greenwashing and even fraud. In May, German authorities raided the offices of Deutsche Bank and a subsidiary based on suspicions that it exaggerated the ESG profiles of some of its investment products. A few weeks earlier, Tesla was removed from the S&P 500 ESG index, partly due to allegations of racial discrimination, while companies like Exxon Mobil remained in the index — prompting Tesla CEO Elon Musk to call ESG a scam.
With all this in mind, we wanted to look further into the current environment of ESG investing. Marketplace’s David Brancaccio connected with Amy Domini, founder and chair of Domini Impact Investments and a longtime leader in socially responsible investing.
The following is an edited transcript of their conversation.
David Brancaccio: It really is the big time. You have big financial institutions that offer these screens. You have smaller companies. What’s your sense, does it debase your industry when you hear news about possible greenwashing to the point that Deutsche Bank’s offices get raided in…
