The World May Be Better Off Without ESG Investing

This provocative opinion piece in Stanford Social Innovation Review states: “The bar for what constitutes a good corporate citizen is abysmally low and may have made ESG investing, arguably the hottest trend in investing today, a greater force for destabilizing society and the planet than if it didn’t exist at all.“ Well worth the read.

My quick take:
1) No, I don’t think that ESG investing is a greater force for destabilizing the world than if it didn’t exist at all.

2) Yes, ESG investing and ESG ratings agencies and systems are fraught with problems that need to be addressed.

3) Yes, I worry about an impending backlash on the ESG investment industry as greenwashing claims and the realization that a high ESG rating does not necessarily connote a “socially good” company will be increasingly illuminated.

4) Even with ESG ratings and accompanying ESG funds, a truly concerned investor must do his/her own due diligence on investments to align the investments with his/her personal values.

I will be posting and writing more in the coming months about the emerging pros and cons of ESG investing and other forms of socially responsible investing.