ESG (Environmental, Social and Governance) scores are becoming ever more important in the marketing of financial products that are sold to the masses. At least US$3trn of institutional assets now track ESG scores, and the share is rising quickly.
Pure BS to charge higher fees
Why did the ESG investor cross the road?
If you’ve spent any time around the sustainable investing world, you might have heard the old joke: “What’s the easiest way to improve your company’s ESG score? Change your rating agency.”
Is it funny? That’s debatable. Is it cynical? Possibly. But is it rooted in truth? Absolutely.
FT
Don’t believe?
esg scores are poorly correlated with each other. esg-rating firms disagree about which companies are good or bad. The Economist has compared the scores of two big esg-rating systems, updating an analysis done by the imf earlier this year (see chart). It shows at best a loose link between the two measurement systems. The same lack of correlation holds even when the e, s and g scores are considered separately, according to the imf. Small wonder, then, that it found no consistent difference between the performance of esg funds and that of conventional ones.
Economist
The result
Tobacco and alcohol companies feature near the top of many esg rankings. And many funds marketed on their green credentials invest in Big Oil.
Economist
Thoughts of a Cynical Investor 
Over the longer term, the Vice Fund has done much better than the broad market. Wonder why don’t more industry professionals focus on this concept??
And both companies & money managers don’t need to pay expensive fees for BS audits & scores. LOL!!
Reblogged this on Muunyayo .