Karen Telleen-Lawton: ESG Investing | Homes and Lifestyle

Channel Islands green comes in many colors (coastal brush).
Channel Islands green comes in many colors (coastal brush), such as the yellow and red pictured here. Credit: Courtesy photo

I’ve been practicing ESG investing for years before Environment, Social Responsibility, and Governance came into vogue.

ESG, formerly called Socially Responsible Investing (SRI), made sense to me from two perspectives.

I wanted to put my money where my heart was, and I reasoned that companies committed to acting ethically would be less likely to engage in activities that ultimately destroyed their value.

Could the “ethical action” hypothesis neutralize the theoretical argument that maximizing anything other than profits cannot logically lead to higher profits? Maybe.

After decades of debate about SRI/ESG investing, studies have shown that overall this strategy has comparable performance to mainstream market investing.

For example, the Kenan Institute of Private Enterprise at the University of North Carolina states:

“Effects on operating performance appear consistently (though not uniformly) positive and suggest that companies with high ESG scores are better in many respects.

“Evidence on ROI is mixed – some studies find share prices of companies with high ESG ratings outperform, but others find no measurable effects and some even document lower cash returns.”

Schwab’s website advises:

“If the concept of socially responsible investing appeals to you, our research found that you shouldn’t lower your expectations when it comes to risk and return. ESG funds have done as well as other funds over time. However, there are many ESG options available and several ways to build an ESG portfolio. Before investing in ESG, you should consider your investment objectives and risk tolerance.”

So you can do good and do good – that’s a win, right?

Apparently not for everyone: Florida Gov. Ron DeSantis is criticizing climate-responsible investments even as his state is ravaged by increased flooding, land subsidence, extreme heat, wildfires and drought.

He believes that “corporations across America continue to push an ideological agenda through our economy rather than through the ballot box.”

According to its mandate, no state funds should be invested in ESG-focused funds.

Florida, along with Texas, West Virginia, Tennessee and others, have pulled public funds from BlackRock and other money managers because they “pursue ESG goals at the expense of purely financial returns.”

BlackRock has noted that its investors are addressing climate change as a long-term investment challenge, and have acted accordingly.

Similarly, in November, a dozen states asked to delay a routine expansion of Vanguard’s authority to own shares of energy companies. They argued:

“The states accused Vanguard of violating its commitment to avoid exercising “any control over the day-to-day management” of the utilities when it voted for a shareholder resolution to more fully disclose their impact on climate disruption. To Michael Hiltzik of the LA Times.

These political actions contradict the reality of climate disruption. Additionally, more than 30 years of expert climate science conducted by oil giant Exxon from the 1970s to the 2000s are challenged.

A recent Harvard study confirms earlier “who knew what when” research, stating that Exxon’s projection models were even more accurate than NASA’s when it came to the climate impact of burning fossil fuels.

Sadly, Exxon’s public statements directly contradicted their internal scientific data.

The International Energy Agency predicted last month that solar and wind power will become the world’s largest sources of electricity generation by 2025. Public and private markets are betting on renewable energy sources not only in the abstract future, but also in the present. ESG investments reflect this realization.

As Kermit the Frog claimed in his lament in the 1970s, “Being green ain’t easy.” However, investing in green now can improve the current and future health of our planet and our wallets.

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