The financial industry has found an opportunity to make money by helping people feel good about themselves. Despite maintaining the opposite, these financings don’t do much to make the world better.
ESG funds promise to invest in companies with better environmental, social, and governance allocation to save and improve worker conditions. The case of the US Vegan Climate ETF protects animals from being eaten.
Money has reached into ESG funds as large groups push pension funds, university funding, and some central banks to shift their financials. The United Nations reinforces Principles for Responsible Investment has 121 trillion dollars of investments under management.
Next few weeks, Streetwise will enquire about the explosion of ESG funding and will also give some solutions and discuss how to use your money in different ways. while understanding the important tradings. ESG supporters have encouraged many companies to sell off dirty power plants, mines.
Selling off investment or shares by itself does nothing to save the planet Just as much oil and coal are dug up and burned as before under different ownership. And there are plenty of people out there to buy the investment. Fossil fuels were left in the ground rather than extracted and sold.
The problem is that less environmentally-considered investors buying those shares, oil wells, or power plants are not going to shut them down unless they stop being profitable.
Adding costs to reduce a company’s carbon footprint or paying staff more, should only help the stock price if it also raises revenue or reduces other costs, by say generating more loyalty from carbon-conscious consumers, lowering staff turnover, or improving relations with regulators. Otherwise, profits can only be maintained bypassing the higher costs through into higher prices.
There is a better way that ESG investing does sort of work and Shareholders can drive companies to stop influencing governments in approval of fossil fuels. Feasibly this will help push customers and governments to do the things that would make them unique. ESG investing is that it destroys everyone from the work that needs to be done.
Rather than quality trying to direct the flow of money to the right causes, it is simpler and far more efficient to tax or regulate the things we as a society agree are bad and finance the things we think are good. Capitalism wonders that the money will then flow by itself.