The left is nothing if not predictable.
Originally published at WND News Center. Used with permission.
ESG investing has become the rage in today’s politically correct society.
The “Environmental, Social and Governance” agenda purports to support green energy and equity among people groups and has been adopted, and promoted, by corporations that want to be known as the ones who are fighting pollution, providing philanthropy, pursuing sustainability and all that.
But a new investigative report from Courthouse News Service warns that isn’t reality.
The report cites the “massive disconnect” between what investors “believe” about their “ESG funds” and what the funds actually do.
“Which means that thousands of people who think they’re changing the world by aligning their portfolios with their values may actually be changing the world in a way they don’t like,” the report said.
The behemoth the ESG agenda has become isn’t in doubt. Investors used half a trillion dollars of their money for those funds in 2021 alone, and nearly half of U.S. retail investors “say they prefer investing in companies that benefit the environment and society.”
But in reality, “many of the largest ESG funds shovel money into companies that are anything but ‘virtuous’ in the minds of their customers,” Courthouse News said.
For instance, the S&P 500 ESG index includes the nation’s biggest fossil fuels producer, but not the leading producer of electric vehicles.
It detailed: “The top holdings of one of the largest ESG funds, the iShares ESG Aware MSCI USA ETF, include fossil-fuel producer Exxon along with companies that have been described in the press as ‘the nation’s fiercest anti-union employer’ (Amazon), make 90% of their products in a country with a terrible human rights record (Apple), have been harshly criticized as anti-consumer by Senators Elizabeth Warren and Bernie Sanders (JPMorgan Chase), and have been attacked by Warren as a dangerous monopoly that should be broken up (Google). The fund also invests heavily in Coke, Pepsi, Kellogg and General Mills, which produce sugary drinks and cereals that can lead to obesity and diabetes.”
Then there’s fracking, which is done by Halliburton. “Another very popular ESG fund, the iShares MSCI USA ESG Select ETF, has a $20 million stake in Halliburton,” the report said.
The report said a study, a “shocking” study, at Columbia University and the London School of Economics found that ESG funds “overall invest in companies with worse track records of complying with labor and environmental laws than non-ESG funds, and they also invest in companies that produce a higher level of carbon emissions per unit of revenue.”
While some ESG funds are simply using consumer misunderstandings for profit, some “may be actively encouraging them.”
“Last year BNY Mellon paid a $1.5 million penalty for falsely claiming that all the investments in its funds had undergone an ESG quality review, and Goldman Sachs paid $4 million to settle similar claims. German authorities recently raided the offices of Deutsche Bank looking for evidence of false advertising of ESG funds,” Courthouse News said.
In the report, Gerri Walsh, of the FINRA Investor Education Foundation, said, “Retail investors don’t understand ESG investing.”
Walsh’s organization found 77% of retail investors think ESG funds align with their values — but only 21% could even correctly identify what ESG stands for.
Since there’s an absence of standardize assessments, the ratings for various companies vary widely. There are some six dozen “rating agencies” that put scores on companies, and each has its own way of looking at factors.
“A recent study found that one leading rating agency had Facebook in the top 10% on environmental concerns while another considered it below average, and one put Walmart’s ‘social’ score in the 61st percentile while another put in the 10th,” the report noted.
Even basic definitions, such as for the environmental component, vary widely.
One analyst said, “How do we define that? Carbon emissions? Water usage? Production of sustainable products? Renewable energy usage? Green patent filings? Protection of biodiversity? You could come up with a nearly infinite number of ways to evaluate a firm’s environmental performance.”