Matt Levine: It's Easy to Make Oil Companies ESG:
https://www.bloomberg.com/opinion/articles/2023-07-12/it-s-e...
Companies with good ESG scores pollute as much as low-rated rivals
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Re: Companies with good ESG scores pollute as much as low-rated rivals
#22I think caring about ESG, and especially evaluating a company's governance, is important. But I don't know how much I really want BlackRock and Vanguard to be the ones doing the scoring...
I agree:
- caring about your investments aligning with your values is good
- investment firms violating civil rights laws and promoting fashionable bigotry using retirement funds to coerce companies into self-destructive behavior is bad
Re: Companies with good ESG scores pollute as much as low-rated rivals
#23When they say pollute in the headline, they mean only C02, which makes the headline misleading clickbait even for people who don't understand what the S and G in ESG stand for. > It can very well be that a high-emitting firm is very good at governance or employee satisfaction. There is no strong relationship between employee satisfaction or any of these things and carbon intensity,” Goltz argued. > “Even the environm…
I hate hate hate how pollution has been reduced to co2 and nothing else. Don't have to worry about global warming if contaminated water and soil kill us all first.
Re: Companies with good ESG scores pollute as much as low-rated rivals
#24When they say pollute in the headline, they mean only C02, which makes the headline misleading clickbait even for people who don't understand what the S and G in ESG stand for. > It can very well be that a high-emitting firm is very good at governance or employee satisfaction. There is no strong relationship between employee satisfaction or any of these things and carbon intensity,” Goltz argued. > “Even the environm…
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Re: Companies with good ESG scores pollute as much as low-rated rivals
#25Not really news is it?
From two years ago: https://www.bloomberg.com/professional/blog/bp-esg-outlook-s...
> BP’s ESG performance and outlook are bolstered by an ambitious net-zero emissions target from its operated upstream production by 2050, complemented by a tenfold surge in green spending, 50 gigawatts of renewable-power generation by 2030 and a 40% decline in oil and gas volume. Ecological metrics are favorable, with significant improvement in the 10 years since the Deepwater Horizon disaster, as BP’s safety and spill records are in-line with or above peer averages. BP’s board is among the most gender-diverse, and it has an investor-friendly governance structure and best-in-class ESG disclosures.
So BP, noted exploder of oil rigs in the ocean, gets a boost to their ESG rating by, among other things, promising to do some shit 30 years from now (a promise doubtlessly worth less than the paper it was written on), and hiring more women. What do either of those have to do with BP's actual emissions impact?
ESG exists to rehabilitate the reputations of companies like this.
Re: Companies with good ESG scores pollute as much as low-rated rivals
#26I think caring about ESG, and especially evaluating a company's governance, is important. But I don't know how much I really want BlackRock and Vanguard to be the ones doing the scoring...
I find it hilarious the kind of conspiracy theories people lob at BlackRock and Vanguard.
BlackRock maybe I can maybe understand, but Vanguard is like the most straightforward boring investment company in the world. It's literally a shareholder co-op for passive investment funds. People have no idea what they are talking about.
Re: Companies with good ESG scores pollute as much as low-rated rivals
#27As far as I can tell ESG is a huge 'begging the question' problem. Companies with good ESG scores do better because we invest in companies with good ESG scores.
But shouldn't the "free market" correct for this? If most people are putting their money into ESG but there isn't a real underlying performance difference, that creates an arbitrage opportunity for people willing to invest in non-ESG?
Sadly, I can already hear the right-wing rebuttal: "the market isn't truly free because of the (bankers) running blackrock! we need govt intervention to ban ESG, then the market will be truly free!"
Re: Companies with good ESG scores pollute as much as low-rated rivals
#28ESG is tricky to talk about thanks to the politization of it. I work on some projects that involve ESG data and I have some thoughts. First there's LOTS of factors. If you bunch them all up into one number, it becomes meaningless as the article describes. I would think wiser minds would use this data to make investment decisions based on some specific risk, like hedging against some environmental disaster which may a…
As you note, the politicization of it makes it difficult to point out the flaws without people assuming you like hate the environment or something. The problem is, like any score, it's easily gamed. That's how we get companies like ExxonMobil having great ESG scores.
The Atlantic had a great article about it:
"When you invest in an ESG fund, you may think you’re buying into a highly curated selection of positive-outlier companies. In reality, it will often look similar to an ordinary market-wide index fund. The 10 biggest holdings in the S&P 500 ESG index include Big Tech companies such as Apple, Microsoft, and Alphabet; big banks such as JPMorgan Chase; and, incredibly, ExxonMobil."
https://www.theatlantic.com/ideas/archive/2023/05/esg-woke-i...
Re: Companies with good ESG scores pollute as much as low-rated rivals
#29ESG is a waste of time, I can't wait until this fad dies down.
Re: Companies with good ESG scores pollute as much as low-rated rivals
#30I'm reminded of Goodhart's law
https://en.wikipedia.org/wiki/Goodhart%27s_law
"When a measure becomes a target, it ceases to be a good measure."