In this episode, we will be exploring the topic of ESG: Is this the death or the future of investing?
ESG, which stands for Environmental, Social, and Governance, was initially a good idea when it started. It was designed to encourage companies to be more responsible, sustainable, and ethical in their operations. However, over time, it has been commercialized in an abusive way for profit and pirated for social and political interests.
In this episode, we’ll dive into the definition of ESG, the good intentions that led to its inception, and the potential financial benefits of investing in ESG strategies. We’ll also discuss the drawbacks of the broadness of the ESG categorization, SEC requirements and enforcement, and the contradictions that exist within the concept.
We’ll explore whether the best approach is to invest in companies that are the best overall or the best in a specific industry, and whether investing in solar panels is the way to go. We’ll also discuss the mining footprint for electric cars and how it impacts both social and environmental issues.
Trends with third-party providers who offer ESG ratings will also be discussed, as well as the volatility and black boxes that come with ESG investing. We’ll also explore how the merger of social media-driven issues, political calls to action, and an overly broad definition of ESG are antithetical to the original concept of ESG or SRI in general.
We’ll conclude by discussing the balance between corporate activism and protecting a corporate's profits, the complications caused by index investing and proxy voting, and the importance of individuality and avoiding broad brushstrokes when investing. We’ll emphasize that investing should always be done to make Money and based on individual virtues and priorities rather than blindly following the herd.
So, if you want to invest based on your definition of ESG or SRI, based on religious or political beliefs, or based on the direction you think the world needs to go in, that is your right.
Thanks to our sponsor, S.E.E.D. Planning Group! S.E.E.D. is a fee-only financial planning firm with a Fiduciary obligation to put your best interest first. Schedule your free discovery meeting at www.seedpg.com
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