What Returns Do You Give Up for Doing Good?
Environmental, social and governance concerns are playing a bigger role in influencing how investors allocate the money they oversee. That’s welcome. But there’s a risk of mission creep as funds come under pressure to use their financial clout to change society in ways that should remain the domain of lawmakers.
More investors are choosing to put savings into specifically designed ESG funds — pools, for example, that only take stakes in companies that pledge to reduce their carbon emissions. Assets allocated to such funds grew 37 percent last year, according to figures compiled by Bloomberg Intelligence. That’s fine. But the rest of the asset management industry, the wider world of non-ESG money, including pension funds, is also being drafted into the battle to make the world a better place. So it’s reasonable to ask the latter group: how willing are savers to risk forgoing returns on their nest-eggs to do good?
Take Norway. There, Parliament is considering barring the nation’s sovereign wealth fund from owning gambling stocks. That would force the $1 trillion Norges Bank Investment Management fund to offload its stakes in casino operators such as Las Vegas Sands Corp. and MGM Resorts International.
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