Polluting Businesses Make A Mockery Of Green Investments

Since 2016, the value of investments in financial products that claim to abide by environmental, social, and governance (ESG) rules has grown from $23 trillion to $35 trillion, The Economist reported.

Photo Insert: A river of plastic in Romania

Bloomberg Intelligence, a research firm, reckons it could exceed $50 trillion by 2025. ESG funds typically tell their customers that, among other things, they do their bit to tackle climate change when they invest in publicly listed companies. Most individual investors take these claims seriously and buy these funds in good faith.

Such faith is not always well-placed. A lack of rigorous measurement means that greenwashing is rife and bogus claims go uncontested. Many funds claim that there is no trade-off between maximizing profits and green investing, which seems unlikely for as long as the externalities created by polluting firms are legal and untaxed.

And ESG funds often seek to meet their goals simply by excluding the shares of firms in polluting industries from their portfolios and piling instead into pricey tech stocks, from Alphabet to Zoom.

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