Environmental, Social, and Governance (ESG) investing has gained visibility in recent years. However, a growing chorus of critics suggests that ESG investing is facing fundamental challenges that question its long-term viability. This video aims to examine the arguments against ESG investing, exploring both its perceived shortcomings and the evolving landscape that may impact its future.
ESG investing has emerged during an unprecedent period of zero interest rates. Zero interest rates resulted in an extraordinarily low cost of capital. Low cost of capital fosters the support of unproven investment concepts. Think of “WeWork” a real estate company that marketed itself as a technology company that was going to remake humanity. WeWork is bankrupt. Think of “Bird” the scooter company that was going to change global transportation. Bankrupt.
Like WeWork and Bird, ESG Investing is an unproven investment concept.
Now, a contrarian viewpoint has gained momentum, asserting that ESG investing is facing insurmountable challenges that render it ineffective and ultimately unsustainable. This video delves into the arguments against ESG investing, critically evaluating the factors contributing to its alleged demise while also examining the potential for adaptation and improvement within the framework.
Arguments Against ESG Investing: 1. Lack of Standardization, 2. Challenges in defining and measuring ESG criteria, 3. Variability in ESG ratings and methodologies, 4. Greenwashing Concerns, 5. Performance Skepticism, 6. Narrow Focus and Exclusionary Practices, 7. Lack of performance in investment portfolios.
The information contained in this Higgins Capital communication is provided for information purposes and is not a solicitation or offer to buy or sell any securities or related financial instruments in any jurisdiction. Past performance does not guarantee future results.