The ESG push of the last 5+ years was rooted in good reasons. But the approach was wrong. In finance, ESG metrics are just factors like value, growth, momentum, etc... Those factors need to explain risk vs returns. The issue is they never did. There was never any explanatory power behind these things. Even the massive backing by asset managers like Blackrock was not sufficient enough to create demand because ESG factors were all over the place: 20 different providers with 20 different BS methodologies - mostly driven by NLP-style approach to parsing quarterly reports. Ultimately you throw in some nice words and greenwash the heck out of your report and your ESG metrics go up.
The free and open market approach prevails. And if we want to see ESG impact the world around us, we should have the free market dictate how that happens rather than Larry Fink.
The free and open market approach prevails. And if we want to see ESG impact the world around us, we should have the free market dictate how that happens rather than Larry Fink.