ESG is a broken concept. There I said it.
In a week where the guy who is considered the "Godfather of ai" quits and warns of the risks to society it makes sense to see what other people no longer believe in the movement they were part of creating. In 2021 a former BlackRock executive, who was the head of sustainable investing, outlined why he left BlackRock and how he now thinks that sustainable investing is a “dangerous placebo that harms the public interest”. Today, after previously evangelizing the ESG trend, more influential people are coming forward to warn of its bastardization. The attached article summarizes some of the comments made last week at a Morningstar conference here in Chicago. The speaker, Aswath Damodaran is a professor of finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. He believes that once the “S” was put in the middle of ESG, the concept was doomed. "It is impossible to achieve a consensus on any social issue, much less the full range of socially responsible concerns that permeate the ESG landscape." ESG, in short, isn't what it was supposed to be. The system has been and continues to be gamed by individuals and companies with agendas. Read on to better understand why ESG has, in Damodaran's mind, been oversold to a group of advisors and investors who are placing their trust in a process that makes us feel we are "doing good rather than a creating a system that does good.”
Aswath Damodaran: It’s Time to Retire the ESG Concept - Articles - Advisor Perspectives
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