ESG
ESG refers to "environmental, social and governance," a phrase used by liberals in connection with investing in politically correct companies on the stock market.
Conservatives, including entire red states such as Florida, reject ESG investing. One commentator writes: "It has long been contended that environmental, social, and corporate governance scores (ESG) are the Left’s attempt to weaponize every non-leftist’s money against his personal beliefs and economic interests. This is patently true . . . to an extent."[1]
In 2022, the Harvard Business Review published the article An Inconvenient Truth About ESG Investing which indicated:
| “ | To begin with, ESG funds certainly perform poorly in financial terms. In a recent Journal of Finance paper, University of Chicago researchers analyzed the Morningstar sustainability ratings of more than 20,000 mutual funds representing over $8 trillion of investor savings. Although the highest rated funds in terms of sustainability certainly attracted more capital than the lowest rated funds, none of the high sustainability funds outperformed any of the lowest rated funds.
That result might be expected, and it is possible that investors would be happy to sacrifice financial returns in exchange for better ESG performance. Unfortunately ESG funds don’t seem to deliver better ESG performance either. Researchers at Columbia University and London School of Economics compared the ESG record of U.S. companies in 147 ESG fund portfolios and that of U.S. companies in 2,428 non-ESG portfolios. They found that the companies in the ESG portfolios had worse compliance record for both labor and environmental rules. They also found that companies added to ESG portfolios did not subsequently improve compliance with labor or environmental regulations. This is not an isolated finding. A recent European Corporate Governance Institute paper compared the ESG scores of companies invested in by 684 U.S. institutional investors that signed the United Nation’s Principles of Responsible Investment (PRI) and 6,481 institutional investors that did not sign the PRI during 2013–2017. They did not detect any improvement in the ESG scores of companies held by PRI signatory funds subsequent to their signing . Furthermore, the financial returns were lower and the risk higher for the PRI signatories.[2] |
” |
According to Elon Musk, the 'S' in 'ESG' stands for 'Satanic'.[3]
Wall Street Journal: ESG stocks underperform in terms of their stock returns
Is ESG Profitable? The Numbers Don’t Lie - Corporations that remain neutral on social and political issues outperform companies that lean left. Wall Street Journal, March 10, 2023
