Kuppy writes
“ESG stands for “Environmental, Social and Governance.” I can certainly understand why some individuals or groups may object to investing in various industries. It’s their capital and they can choose to allocate it as they see fit. When they are sizable clients, they can force portfolio managers to divest certain businesses and not make new investments in certain sectors. This all seems logical—the client is always right. However, at this point, ESG has been taken to such an extreme that it is bordering on silly.
Keep in mind that the vast majority of portfolio managers under-perform their benchmarks and only attract fund flows through their marketing departments. Why miss out on fee-earning capital because you haven’t adapted an ESG mandate? Coal? Nope. Oil and gas? Won’t touch it. Tobacco? Bad. Those are obvious, but where will they draw the line? Why not ban soda? That’s just diabetes in a can. Is social media next? What about entertainment—that’s sure to offend someone. What if you don’t agree with a country’s politics? Do you write off whole continents? Clearly, there’s a problem here. You could end up with large portions of the global economy on the no-go list. Once again, I respect an individual’s decision to forgo a particular investment for ideological reasons, but as a consequence, whole sectors of the economy are now cut off from capital.”
https://adventuresincapitalism.com/2019/11/29/esg-excessive-share-price-growth/