ESG Investing Is Not Sustainable Investing
There’s a lot of confusion in the marketplace regarding ESG (Environmental, Social, Governance) and Sustainable, sometimes known as SRI (Sustainable, Responsible, and Impact) investing. Many people think the two terms are interchangeable – I’m here to tell you that they aren’t.
Blackrock BLK +0.4%, Vanguard, and other big investment houses are simply capitalizing on the growing interest in values-aligned investing. In fact, they have invested a significant amount of money in marketing ESG to have you believe that they are the same. Environment, social, and governance metrics are data points that hypothetically deliver insight into how responsible a company is. The problem is that there is no standard by which companies are judged – and the metrics are constantly changing.
A recent Bloomberg article questions MSCI’s MSCI -0.3% ESG ratings, which is where large firms like those mentioned above get their data. The article says, “…the ratings don’t measure a company’s impact on the Earth and society. In fact, they gauge the opposite: the potential impact of the world on the company and its shareholders.” A far cry from what many investors believe they are getting – positive solutions to make the world a better place.
Read more @Forbes
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