Today, Explained Is ethical investing a sham?
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Jul 19, 2023 James Surowiecki, a contributing writer at The Atlantic and author of 'The Wisdom of Crowds,' critiques the current state of ESG investing. He explores the historical evolution of ethical investing and highlights the political tensions surrounding it, particularly from Republican candidates. Surowiecki raises alarms about the legitimacy of ESG ratings and argues that they may not ensure true corporate accountability. He also questions the financial performance of ESG funds compared to traditional investments, revealing concerns over fees and market manipulation.
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ESG Funds Theory
- ESG funds theoretically invest in companies excelling in environmental, social, and governance criteria.
- They promise good returns while vaguely contributing to a better world.
Early Socially Responsible Investing
- Socially responsible investing originated in the 1970s, focusing on values-based investments.
- Investors avoided companies supporting apartheid, tobacco, or weapons manufacturing.
ESG Boom
- The ESG acronym emerged in 2004 from a UN report.
- Growing investor demand and ESG rating agencies fueled the creation of numerous ESG funds, managing trillions.
