Kerby Anderson
Environmental, social, and governance (ESG) investment practices have been in the news for some time. But there is growing evidence that the popularity of ESG mandates is fading.
Alison Schrager writes that “The ESG Bubble is Bursting.” Sure, individuals would like to invest in corporations that reflect their values, but she says, “what counts as virtuous is rarely cut and dried.”
Vivek Ramaswamy warns “How Woke Capital Politicizes Your Retirement.” He explains that politics have quickly come to dominate index funds. When you buy an index fund that is managed by these big fund managers, “you’re promoting ESG objectives whether you want to or not.”
Mark Joffe argues in his op-ed that ESG investment practices “distract investors and corporate management from maximizing long-term profitability.” It diverts from priorities that align with increased productivity and focuses on a “shifting array of inconsistently defined social-impact criteria.” That is why he concludes that “ESG is Bad for the Economy.”
Yale law professor Jed Rubenfeld and Former US Attorney General William Barr argue that “ESG Can’t Square with Fiduciary Duty.” They cite a letter written by nineteen state attorneys general warning that the ESG used by one of the fund managers appears to involve “rampant violations of the sole interest rule a well-established legal principle.”
Focusing our attention and investments on companies that are concerned about the environment and their social responsibility may sound like a good idea. But the number of articles coming out is a reminder to all of us that often the details in a policy matter.